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Don’t Miss The Refinance Boat
Whether you’ve heard it on the news or from friends or on Facebook, you’re likely aware that mortgage rates have continued to hold steady at the lowest points in the past three years. If you’re wondering how you as a homeowner, can take advantage of these great rates, it may be a a good time to consider a refinance of your higher interest mortgage. But how can you know if and when it’s the right time for you to refinance?
Here are the three primary reasons homeowners refinance:
- Reducing their mortgage payment amount (because of the lower interest rate)
- Getting rid of Private Mortgage Insurance (PMI)
- Taking cash out of the equity of their home to pay off higher interest debt or make home improvements.
So when is the best time?
The following scenarios would suggest its a very good time to refinance:
- Rates have dropped below the rate of your current mortgage. How much below will depend on quite a few factors which should be discussed with a loan professional.
- You have an adjustable rate mortgage. If you have an adjustable rate mortgage that is scheduled to adjust higher in the coming year and you’re not planning to sell your home before the adjustment occurs, you could refinance into a fixed rate mortgage. Even if the current rate is higher, this could still be beneficial for your long term financial situation.
- You are paying PMI and your equity has surpassed 20% of your outstanding mortgage balance. By refinancing you’ll no longer pay that insurance premium and reduce your monthly payment amount. This is especially true if you have an FHA loan so keep an eye on home values in your area and pay your mortgage down to get to that 20 percent mark as fast as possible.
- You are planning on a major expense this year including paying for college or a wedding or a remodeling project. Refinancing to take money out of your home’s equity can be a great, low interest option for paying for major expenses.
Think you’re ready to refinance? Let’s talk real numbers and see if it makes sense for you and your goals. Schedule a 15-minute consultation with one of our Mortgage Advisors today!