If you’ve been on the fence about buying a home or refinancing your mortgage, the Federal Reserve’s recent rate cut on September 17, 2025, might tip the scales. Mortgage rates have started to move lower, offering some relief after years of stubbornly high borrowing costs. While a Fed cut doesn’t guarantee mortgage rates will drop equally, this move typically lowers the cost of getting a loan, making it a good time to explore your options. Whether you’re a first-time buyer or a homeowner looking to reduce your monthly payments, understanding what the latest mortgage rates mean for you is key to making the best financial decision.
How to Determine if Buying a Home Now is Right for you.
If you’ve been thinking about buying a home, the recent Federal Reserve rate cut may create a favorable window to secure a lower mortgage rate. Lower rates can mean smaller monthly payments and potentially thousands of dollars saved over the life of your loan. However, it's important to consider more than just interest rates when deciding if it's the right time to buy.
While lower rates can make buying a home more affordable, you should also assess your personal financial situation. Are you financially ready for the responsibilities of homeownership, including a down payment, closing costs, and ongoing maintenance? Additionally, keep an eye on local housing market conditions. If home prices remain relatively high, it may impact your decision. Here are some simple steps you can take to determine if purchasing a home now is right for you:
Step one: Calculate your potential monthly payment. Test various scenarios using different home values, down payment amounts, and interest rates to see what fits your budget.
Step two: Contact your mortgage loan officer with any questions or to start your application. This is also a great time to ask about any current offers or promotions on new mortgage loans.
Ultimately, lower mortgage rates can create favorable buying conditions but making sure you’re financial prepared and the timing aligns with your goals is key to a smart homebuying decision.
How do Determine is Refinancing Now is Right for You
If you currently have a mortgage, refinancing to a lower rate generally means a lower monthly payment. But keep in mind there could be costs associated with refinancing that could range from $4,000 to $5,000 or more, depending on your loan size. Like your original mortgage, refinancing can require certain closing costs including an appraisal fee, processing fee, title search fee, application fee, attorney fees, etc. The fees charged vary by bank or mortgage company, so consult your loan officer.
To determine if now is the right time to refinance your mortgage, it’s important to calculate your breakeven point. This is the amount of time it takes to recoup all the required closing costs through the savings gained from a lower monthly payment.
How to Calculate Your Breakeven Point
Calculating your breakeven point is simple:
Step one: Talk to your loan officer and add up all your refinancing closing costs. This is also a great time to ask about any current offers or promotions on mortgage refinances.
Step two: Calculate what your monthly payment will be with the lower interest rate. Then, estimate your monthly savings compared to your current payment.
Step three: Divide your total closing costs by your monthly savings. This number shows you the number of months it will take to breakeven on your refinance.
For example, if all your closing costs add up to $5,000 and you estimate you will save $200 per month by refinancing to a lower rate, then your breakeven point is 25 months.
If you plan to stay in your home or keep your mortgage at that rate for more than 25 months, then refinancing your home probably makes sense. If you plan to sell your home in less than 25 months, it might not make sense to refi. Likewise, if you plan to continue refinancing to obtain a lower rate as the Fed potentially continues their rate cuts, refinancing now may not be the most cost-effective option because you will pay fees each time your refi your home.
Patience is Key
If, you ultimately decide that purchasing a home or refinancing your current mortgage doesn’t make sense right now, it’s important to be patient and not lose hope. No one has a crystal ball for predicting when, how much, or how often the Fed will cut rates in the future. As rates fall, continue to calculate the affordability of buying or refinancing, and go with the decision that makes the most financial sense for you.
If you would like to refinance now or have questions about whether refinancing your mortgage is right for your situation, an FNBO Mortgage Loan Officer is available to help. Give us a call today.
