Is Refinancing Still a Smart Option?

With 30-year fixed mortgage rates jumping up following a strong employment report and a surge in 10-yr Treasuries, many are wondering if refinancing is still a smart option.

With interest rates at their highest level for 2015 so far you might be wondering if you should just throw in the towel for refinancing. But while a 30-basis point increase is nothing to sneeze, 3.85% is still far from high. In fact, mortgage rates still remain near the lows we saw back in May 2013.

Furthermore, FHA has recently calculated that based on conservative estimates, 1.7 million out of roughly 4.4 million existing eligible FHA loan holders could save money by refinancing. Based on their assessment—the combination of low interest rates and the recent reduction in the FHA mortgage insurance premiums (from 1.35% to .85%), could give buyers a 1% mortgage cost savings that would make refinancing a practical option.

Less conservative evaluations showed that as many as 2.4 million FHA borrowers would save by refinancing if the lower mortgage rate combined with the new FHA premiums resulted in at least a 0.75% reduction in annual mortgage costs.

Of course, if mortgage rates swing upward, this would impact calculations. However, if you’ve been on the refinancing fence, you can contact your loan officer ( ) to run numbers and determine what makes sense for your situation. Because, even at conservative estimates and current mortgage rates, 1 out of every 3 FHA borrowers could save money by refinancing.

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