Rates on 30-year fixed-rate mortgages are down to 5.34% this week. That's the lowest they've been in close to half a century, reports Freddie Mac ( FRE), and consumers are scrambling to take advantage. Refinance activity had been already on the rise, according to the Mortgage Bankers Association , but the most recent move this week by the Federal Reserve to lower the federal funds rate and to buy up large amounts of mortgage debt have added fuel to the fire. TheStreet.com Ratings analyst Philip van Doorn says the Fed's rate cut "will hopefully spur the market to start moving some of the vast inventory of new houses." However, van Doorn cautions that the new rates won't help homeowners whose "homes are now worth considerably less than their outstanding balances."
Unless you live in your home long enough for the savings from that lower mortgage rate to pay off those upfront costs, refinancing might not be right for you -- regardless of the historically low rates. To help with deciding whether refinancing is the right move, check out the Refinancing Calculator at BankingMyWay.com.