What Mortgage Refinance Rates Mean for New Homeowners

Whether you’re a first-time home buyer or an experienced homeowner seeking more favorable loan terms, it’s important to consider the cost to refinance a mortgage.

Current trends and projections for the housing market and interest rates provide insight into the best time to purchase a home.

Loan options are most attractive to borrowers when mortgage refinance rates are low. With home prices rising at a slower pace than in previous years and a potential decline in interest rates, there may be benefits to purchasing a home as a first-time buyer. However, it’s important to consider interest rate trends, housing affordability, and what mortgage programs benefit you and best fit your situation.

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Home sales are currently on the rise month over month and year over year. Although home prices are still rising, the rise is more gradual than in past years. A still-high market could force interest rates down.

However, downward trends in affordability continue to present challenges for typical U.S. families. House prices have risen by 40% over the course of recent years, due to factors such as inflation and high demand caused by record low interest rates in 2021. In response, the Federal Reserve raised interest rates to combat inflation.

When interest rates and unemployment fall, and income levels rise, these and other economic factors can drive housing demand and development.

Mortgage Refinance Rates Appear to Be on the Decline

Mortgage refinance rates are expected to decline in 2024, though the drop will be incremental and likely won’t reach below 6% until 2025. The beginning of this year saw a slight increase, with the average 30-year fixed-rate mortgage reaching 7.13% in mid-February. Yet, this still marks a lower rate than we saw at the same time last year. Economists predict several rate cuts by the Fed, beginning sometime after May.

A period of low interest rates usually presents the best opportunity for borrowers to secure a mortgage. Certain first-time home buyer programs can ease the financial burden of borrowers, providing benefits such as reduced or no down payment, closing cost assistance, and lower interest rates.

If you’re looking to purchase your first home, a number of available mortgage options can help. These can include federal loan programs such as FHA, VA, USDA, and conventional loans. There may also be state-specific programs to assist first-time home buyers in the form of tax credits, grants, and other assistance programs. Some loans even allow you to include renovations in your mortgage cost.

Some lenders, like The Moreira Team, offer upfront approval guarantees.

Approval guarantees give borrowers more purchasing power by letting the seller know you’re fully approved – not just pre-approved. This allows you to waive the financing contingency and improves your chances of winning a house in a competitive market.

Here are a few key mortgage programs to consider for first-time home buyers:

  • Federal Housing Administration (FHA) loans – These are government-backed loans that are popular due to only requiring a 3.5% down payment for first-time purchasers. Although this down payment rate depends on having a credit score of 580 or higher, federal loans are often more flexible with credit requirements, and the down payment and closing cost can be covered by gift funds.
  • HomeReady and HomePossible programs – Fannie Mae HomeReady and Freddie Mac HomePossible loans are offered to first-time home buyers who don’t have a lot saved for a down payment. These programs allow for a 3% down payment, reduced mortgage rates, and lower loan costs for low- and moderate-income home buyers.
  •  VA loans – Veterans Affairs (VA) loans are available for eligible military service members and veterans. VA loans typically don’t require a down payment, allow closing cost assistance, and offer competitive interest rates with more flexible credit requirements versus conventional loans.
  • USDA loans – The U.S. Department of Agriculture (USDA) offers loans for rural and suburban home buyers with low to moderate incomes, known as the USDA Rural Development Guaranteed Housing Loan Program. This loan program offers some of the most attractive terms compared to other mortgage options, matched only by VA home loans. It offers benefits such as no down payment, below-market mortgage rates, and reduced mortgage insurance for those who qualify. 

Deciding which type of mortgage option is right for you and when to buy involves many important considerations and moving parts. The right mortgage specialist can help you secure the home loan that’s right for your family with the best terms possible.

So, Is It a Good Time to Purchase a Home?

Home buyers should consider the pros and cons of the current financial housing market before deciding if the time is right for them to purchase a home. Despite declining interest rates, home buyers must face the challenges of affordability. Inflation caused by high housing demand and low supply means housing costs aren’t expected to fall dramatically in the immediate future, and it’s important to consider the best conditions for your situation.

Here are some important factors to consider:

  • Near-future financial stability.
  • Long-term planning.
  • How long will you live at your home?
  • Can you get pre-approved?
  • Are better loan terms around the corner, or is this your best window?
  • Do you have a trusted lending partner?
  • Is there increasing or decreasing availability in your desired neighborhood?

The right lending partner has insights into current housing market conditions and can help you determine the best mortgage option for you and your family.

Find a Lender Who Can Help You Know When the Time Is Right

There’s a lot to consider when you’re buying your first home. The Moreira Team studies the market to help our clients know when they should pull the trigger on qualifying for a home loan versus when to wait.

When mortgage refinance rates improve, we’ll help our clients refinance to get the most out of their home equity, so they can reduce their payments and improve their financial freedom. At Moreira Team, we have a proven track record of helping first-time home buyers qualify for home loans.

Our team will assess your current finances and equity, and determine how these factor into the current housing market in order to help you find the best possible option to fit your needs and expectations.

Are you a first-time home buyer considering if now is the right time to buy a home? Want to know more about how mortgage refinance rates can impact your decision to buy? The Moreira Team can help.

The Moreira Team is ready to help you navigate the home-buying and loan process so you can start the next chapter of your life. It’s our mission to maintain transparency so you understand each step. Our team has the experience and resources to find a loan that suits your needs at a competitive rate. Get your custom rate quote today and take the first step toward homeownership.