Today’s Mortgage Refinance Rates: December 26, 2022

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mortgage rates they have been down in recent weeks and are still low today. As inflation continues to slow, mortgage rates should also continue to gradually decline.

As rates drop over the next two years, homebuyers will find it easier to find affordability in the real estate market. When rates go down, the purchasing power of home buyers increases. When home prices are high, low mortgage rates can give people’s budgets a much-needed boost.

Mortgage Rates Today

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Mortgage Refinance Rates Today

type of mortgage average rate today
This information has been provided by Zillow. see more
mortgage rates on Zillow

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use our free mortgage calculator to see how current mortgage rates will affect your monthly and long-term payments.

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$1,161
Your estimated monthly payment

  • paying a 25% a higher down payment would save you $8,916.08 about interest charges
  • Reduce the interest rate in 1% I would save you $51,562.03
  • paying an additional $500 each month would reduce the duration of the loan by 146 months

By entering different terms and interest rates, you’ll see how your monthly payment might change.

Mortgage Rate Projection for 2023

Mortgage rates began rising from record lows in the second half of 2021 and have risen more than three percentage points so far in 2022. They are likely to remain near their current levels for the rest of 2022.

But many forecasters expect rates to start falling next year. in its latest forecastFannie Mae researchers predicted that 30-year fixed rates will trend lower through 2023 and 2024.

But whether mortgage rates will drop in 2023 depends on whether the Federal Reserve can control inflation.

In the last 12 months, the Consumer Price Index increased by 7.1%. This is a significant slowdown compared to the level of inflation earlier this year, which is a sign that mortgage rates may start coming down soon as well.

If the Federal Reserve acts too aggressively and causes a recession, mortgage rates could fall more than current forecasts suggest. But rates probably won’t drop to the record lows borrowers have enjoyed over the past two years.

When will house prices go down?

House prices are starting to fall, but we probably won’t see big dropseven if there is a recession.

The S&P Case-Shiller Home Price Index shows that prices continue to rise year after year, although they have fallen on a monthly basis in recent months. Fannie Mae researchers expect prices to fall 1.5% in 2023, while the MBA expects a 0.6% decrease in 2023 and 1.2% decrease in 2024.

Sky-high mortgage rates have pushed many hopeful buyers out of the market, slowing homebuying demand and putting downward pressure on home prices. But rates may start coming down next year, which would take some of that pressure off. The current supply of housing is also historically lowwhich will probably keep prices from going too low.

Pros and cons of fixed rate mortgages vs. adjustable rate

Fixed rate mortgages lock in your rate for the life of your loan. Adjustable Rate Mortgages lock in your rate for the first few years, then your rate goes up or down periodically.

ARMs generally start at lower rates than fixed-rate mortgages, but ARM rates can increase after your initial introductory period ends. If you plan to move or refinance before the rate adjusts, an ARM might be a good deal. But keep in mind that a change in circumstances could prevent you from doing these things, so it’s a good idea to consider whether your budget could handle a higher monthly payment.

Fixed-rate mortgages are a good choice for borrowers who want stability, since your monthly principal and interest payments won’t change over the life of the loan (although your mortgage payment could increase if your taxes or insurance increase).

But in exchange for this stability, you will get a higher fee. This may seem like a bad deal right now, but if rates rise even higher in a few years, you might like having a rate lock. And if rates are trending downward, you may be able to refinance for a lower rate.

How does an adjustable rate mortgage work?

ARMs start with an introductory period where your rate will remain fixed for a certain period of time. After that period is over, it will begin to adjust periodically, usually once a year or once every six months.

How much your rate will change depends on the index the ARM uses and the margin set by the lender. Lenders choose the index their ARMs use, and this rate can go up or down based on current market conditions.

The margin is the amount of interest a lender charges on the index. You should shop around with several lenders to see which one offers the lowest margin.

ARMs also come with limits on how much they can change and how high they can go. For example, an ARM may be limited to a 2% increase or decrease each time it adjusts, with a maximum rate of 8%.

Do I have to get a HELOC? Pros and cons

If you’re looking to build equity in your home, a HELOC might be the best way to do it right now. unlike a refinancing with cash withdrawalyou won’t have to get a whole new mortgage with a new interest rate, and you’ll probably get a better rate than you would with a home equity loan.

But HELOCs don’t always make sense. It is important to consider the pros and cons.

HELOC Advantages

  • You only pay interest on what you borrow
  • They typically have lower rates than alternatives, including home equity loans, personal loans, and credit cards.
  • If you have a lot of capital, you could borrow more than you could get with a personal loan

HELOC Cons

  • Rates are variable, which means your monthly payments could increase
  • Taking equity out of your home can be risky if the property value goes down or you default on the loan
  • The minimum withdrawal amount can be more than you wish to borrow

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