The effects of the coronavirus continue to spread across the U.S. months after the first reported cases of the virus. As many people continue to struggle with health issues, income loss, unemployment, and social distancing, many consumers are considering refinancing as mortgage rates reach a historic low.
But is now the right time to refinance loans? The short answer: maybe.
While the Federal Reserve did cut their interest rates, mortgage lenders have tightened restrictions, so the refinance process may be a bit more challenging — particularly, when it comes to qualifying. To see personalized pre-qualified mortgage rates, head over to Credible now. You'll get a quick look at rates before committing to any mortgage lenders.
Factors that could affect how valuable a home refinance includes equity, your credit score and whether refinancing would allow you to ditch your private mortgage insurance. If you have at least 20 percent equity in your property, you’re more likely to benefit from refinancing your home.
Some areas of the country are experiencing more favorable mortgage rates than others, so if you live in one of these cities, the cost of refinancing may be worth it (and your savings account may eventually thank you).
7 best cities for a mortgage refinance
Here are a few cities where homeowners may have access to better interest rates.
Salt Lake City, Utah
Median Home Price: $419,987Average Savings: $197Home prices in Salt Lake City have gone up over 5% in the last year. The population has grown by nearly 10 percent in the previous decade. The Salt Lake area has also seen an increase in new construction.
Median Home Price: $283,000Average Savings: $133The average home value has increased by almost 3 percent since last year. Houston had a sales year with a steady supply of available homes and a record number of single-family home sales.
Median Home Price: $467,621Average Savings: $219Home prices have gone up almost 6.5 percent since last March. Additionally, home sales in the area increased as did inventory, which created higher demand. Homes were also on the market for less time than average.
Median Home Price: $752,508Average Savings: $354Home prices have increased by nearly 6 percent in Los Angeles in the last year. Homes in California are notoriously high thanks to plenty of sunshine and a shortage of available housing.
Charlotte, North Carolina
Median Home Price: $252,438Average Savings: $119 Home prices have increased by 5.3 percent over the past year. Housing sales in Charlotte have dropped by 21% in April, but sales prices had risen before COVID-19. Despite delays in purchases, housing prices are staying steady.
Median Home Price: $767, 906Average Savings: $367Home values have increased by 2.2 percent over the last year. Seattle housing prices were increasing steadily since last year, and Seattle was ranked as the hottest housing market in the country.
Raleigh, North Carolina
Median Home Price: $290,270Average Savings: $136Home prices have increased by nearly 3 percent over the last year. Raleigh sits as the second hottest real estate market in the country. An increase in tech jobs and real estate investment have boosted home values in the community.
*Note: To create this list, we looked at the median home price (as estimated on Zillow). We used a loan calculator to determine the difference in monthly payments based on the average interest rate from April 2019 (4.14 percent) compared to April 2020 (3.31 percent). We looked at 30-year loans for the full value of the home to determine the price difference.
If you’ve decided to refinance your mortgage, use Credible to compare rates from multiple lenders at the same time.
For those of you who are struggling to pay your mortgage and don’t qualify for a refinance, there is help available. Talk with your lender to find out how they’re helping their customers right now.