With the new lows on home mortgage rates, we have been looking at refinancing for many clients. On July 16, 2020, the interest rate for a 30-year home loan had fallen to 2.98%. In addition, the average interest rate for a 15-year home loan had declined to 2.48%.1,2,3
Good news for homebuyers
While it's uncertain how long these historically low rates will last, we think they may be around at least though the fall, and possibly into next year. Keep in mind this article is for informational purposes only. It's not a replacement for real-life advice. It’s always a good idea to consult with your tax, legal, and accounting professionals before considering any changes to your living situation.
When looking at the tax advantages of refinancing, it might be a good idea to reference your last tax return. Mortgage interest is only deductible if you itemize deductions. With the standard deduction at $12,400 and $24,800 for married filing jointly, along with the $10,000 limit for state and local taxes, many people no longer itemize deductions.
For many of our clients, buying a home in the Bay Area means having a jumbo loan, which is a loan more than $765,600 in Santa Clara county. With jumbo loans, it is often impossible to get the lowest rates. It might still be worth refinancing, but you may face more fees or paperwork.
Good news for investors
Good news for everyone
Whether or not rates will drop even lower is anyone's guess. Even though it seems unlikely, mortgage issuers are dealing with a level of uncertainty that makes it harder for them to judge risk and assess the long-term value of the loans they originate. Some banks are being more cautious than others and it might be worth the effort to shop around.
We often support clients in refinancing their mortgages by doing a breakeven analysis on a refinancing offer, connecting you to professional mortgage brokers, or talking over the decision to pay off a mortgage versus carry a mortgage into retirement. Let us know if you’d like to chat about this or any other topics you’re pondering. We are always here to help.
1. OCRegister.com, July 16, 2020 2. Realtor.com, July 13, 20
3. FreddieMac.com, July 16, 2020 4. TheBalance.com, February 10, 2020
Record Low Mortgage Rates & Refinancing
August 26, 2020