‘Look at refinancing now’: Falling interest rates could save homeowners money

NEWTON, Mass. — Interest rates are finally coming down and that will create refinancing opportunities for a lot of people.

David Jordan recently bought a home and he’s already thinking about refinancing, and he hasn’t even moved into it yet.

“If things do drop another couple of percentage points over the next year or two, we could always do the re-fi.”

“Anyone who’s purchased a home in the last couple of years needs to take a look at refinancing now. Mortgage rates have come down mightily. . . almost two full percentage points since hitting 8% last October,” said Greg McBride with www.bankrate.com.

Marie Presti, a Massachusetts real estate broker, suggests her clients take the lowest re-fi rate they can get that covers closing costs.

“Because even if the rate drops two months later, you could refinance again if you look at the no closing cost option.”

It’s easy for a buyer to be seduced when they’re buying a house. Brian Mahoney, Senior Vice President and Director of Sales at the Salem Five Mortgage Company, has this advice:

“I think the most important thing is that you can afford the payment that you’d be saddled with for an indefinite time when you’re making that initial purchase.”

If refinancing then becomes an option, Mahoney says to consider how long you plan to stay in that house.

“I like the idea of recapturing any money you spend on closing costs inside of 26 months,” said Mahoney. “You want to make sure that in a short amount of time, you’re at least breaking even with the money you may spend.”

Many homeowners still fondly remember the go-go years in the recent real estate market when mortgages were under 3%. McBride doesn’t see a return to those numbers.

“This is the beginning of a series of rate cuts that we’ll see not only through the balance of this year but through much of 2025,” McBride explained. “But a little context: we’re not going back to a low-rate environment. We’re just going from high interest rates to not so high.”

He believes if a homeowner can shave .5% -.75% off their loan, then it’s time to start looking into refinancing.

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