Is Now the Right Time to Refinance Your Home Equity Loan? Here’s What Experts Say

Lisa Mailhot  |  November 12, 2024

Is Now the Right Time to Refinance Your Home Equity Loan? Here’s What Experts Say

 

With the Federal Reserve recently cutting interest rates by 50 basis points, many homeowners with existing home equity loans or home equity lines of credit (HELOCs) are considering refinancing to secure a lower rate. While home equity loans generally offer better terms than credit cards or personal loans, the rates have been higher than in previous decades. However, with the Fed’s latest actions, there’s a renewed chance to save. So, is it time to refinance your home equity loan? Here’s what industry experts recommend.

Why You Should Refinance Your Home Equity Loan Now

Refinancing now could be a smart move if your current home equity loan or HELOC carries a rate set during a peak period. A lower rate could mean significant savings on monthly payments and overall interest costs. Domenick D’Andrea, co-founder of DanDarah Wealth Management, points out that refinancing to a lower rate could help many borrowers reduce their financial load. Even though the Fed may continue to reduce rates, waiting too long could mean missing out on current savings opportunities.

Refinancing also makes sense if you used the loan to increase your property’s value through renovations, says Jess Schulman, President of Bluebird Lending. Given the potential for higher property appraisals, these enhancements could help you secure a more favorable rate. Additionally, HELOC borrowers could benefit from resetting their high credit limit based on their property’s new appraised value, allowing for even more flexibility.

Not every homeowner will benefit from an immediate refinance. As Neil Christiansen from Churchill Mortgage notes, refinancing comes with costs, which may take several years to recoup. Homeowners should calculate whether the savings will outweigh these upfront costs. If the break-even point on refinancing costs exceeds three to five years, reinvesting that money elsewhere may yield a better return.

Additionally, future rate cuts expected in 2024 and 2025 may make refinancing even more beneficial later. Melissa Cohn, Regional Vice President at William Raveis Mortgage, advises homeowners with high-rate, fixed loans obtained within the past year to consider waiting for even lower rates. Refinancing repeatedly is costly, so waiting for additional rate reductions may offer the best balance between savings and timing.

Bottom Line

Deciding to refinance your home equity loan depends on your current rate, financial goals, and expectations for future rate cuts. If refinancing now offers a noticeable reduction in payments, you may want to lock in these savings. However, patience may pay off if waiting a bit longer could yield more significant savings with further rate cuts. Ready to make a move to Orange County? Let’s connect!

 

 

Reference: “Should you refinance your home equity loan now that rates are cut? Experts weigh in” by Matt Richardson. Published on November 11, 2024.

RECENT BLOG POSTS

From Corona to San Clemente: Navigating the Southern California Real Estate Market in Q2 2025

Explore the Southern California real estate market in Q2 2025 with insights on inventory trends, price changes, and buyer behavior in cities like Corona, Costa Mesa, D… Read more

Mortgage Rates Drop, Boosting Homebuyers' Purchasing Power

As mortgage rates drop to their lowest level in months, homebuyers are gaining more purchasing power. Discover how this shift is benefiting house hunters and what it m… Read more

California Eases Building Rules to Tackle Housing Crisis

California is tackling its housing crisis by rolling back the California Environmental Quality Act (CEQA), long criticized for stalling new developments. This game-cha… Read more

Understanding Current Housing Market Trends

The housing market is experiencing some noticeable changes, from fewer new listings to a drop in buyer activity. In this blog, we dive into the latest market shifts, w… Read more

US Median Home Prices Hit Record High

The median sales price of a U.S. home has surged to a record high of $396,500, but with more homes on the market, buyers are in a stronger position to negotiate. Learn… Read more

Mortgage Applications Rise Slightly After Recent Decline

Mortgage applications have increased by 1.1% following a decline the previous week, signaling some shifts in the housing market. In this blog, we explore the latest mo… Read more

Longtime Homeowner? This Hidden Tax Could Cost You Thousands

Many longtime homeowners in Orange County are sitting on a hidden tax burden due to outdated capital gains rules that haven’t changed since 1997. Learn how this overlo… Read more

Home Prices Slow as Buyers Gain Power

May 2025 saw home prices at seasonal highs, but growth has nearly stalled as market dynamics shift. With more listings than buyers, slower sales, and increased negotia… Read more

What Home Sellers Must Know About Capital Gains Tax

Selling your home may come with a tax obligation if you earn a profit. Learn how capital gains taxes work, what exemptions may apply, and how to plan strategically to … Read more

We are excited to assist you in finding your perfect home

Let's find a time that suits you best to chat about your goals, show you how we work, and figure out how we can help you the most