by Maurie Backman | July 28, 2021
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Mortgage applications rose last week. Should you get in on the action?
Last week, the yield on the 10-year Treasury bond plunged, and that sent mortgage rates, which tend to follow that yield, plummeting. The result? The 30-year mortgage rate hit its lowest level since February of this year, and the 15-year mortgage rate hit a record low last seen in 1990.
Not shockingly, there was an uptick in mortgage activity in light of these falling rates. Total mortgage applications increased 5.7% for the week ending July 23, and the bulk of that activity came in the form of refinances.
Secure access to The Ascent's free guide that reveals how to get the lowest mortgage rate for your new home purchase or when refinancing. Rates are still at multi-decade lows so take action today to avoid missing out.
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When mortgage rates fall, it can be tempting to either speed up your home-buying plans or rush to refinance your existing mortgage. But is that the right call?
If you're in the market for a new home, you should know that today's housing prices are very inflated, and that inventory is very low. As such, you might struggle to find a home you can afford. Or, you might find a home you can technically afford, but it may not be the type of home you really want. You may have to settle for a smaller property or one that's not in the best of shape.
Before you decide to apply for a mortgage, ask yourself:
Answering these questions will help guide your decision.
Meanwhile, if you're thinking about refinancing your mortgage, that may be a more viable option than buying a home in today's red-hot market. Refinancing could shrink your monthly mortgage payments and make your home more affordable to pay off. It can also save you money on interest over the life of your loan.
But to see if refinancing is right for you, ask yourself:
While mortgage rates, including refinance rates, have been competitive since the start of the year, right now, they're even more attractive. That gives you a prime opportunity to enjoy big savings on a new home or an existing one. Just make sure it's the right time to buy a home or refinance a mortgage before you move forward. Both are big decisions and ones you should consider carefully so you don't regret them later on.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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