Although interest rates have risen since the start of the year, they are still historically quite low – but does that mean it is a good time to refi? Read on for more information and contact one of our licensed Loan Officers today to discuss your options.
What is a mortgage refinance – and why do some home owners refi?
In plain English, a mortgage refinance replaces your current loan with a new one. By refinancing, you may have the option to update different aspects of your mortgage terms.
Some of the reasons home owners may choose to refinance include:
- Reduce their interest rate and monthly payment
- Take cash-out to work on upgrades or pay off high interest debt
- Get rid of interest-only, second mortgages
- Speed up the process of paying off their current mortgage loan
We suggest reaching out to your Loan Officer to discuss your specific mortgage terms and details to determine if a refinance may be beneficial to you – but first, it is helpful to have an idea of your goals.
What are your goals?
Your reasons for seeking a refinance can be influenced by the market and should be considered based upon market conditions. For example, if you’re hoping to reduce your interest rate, but the market rates available are higher than your current rate, it may not be the best time to seek a refinance. By having a clear vision of what your goals are and communicating those goals with your Loan Officer, you will be able to better determine your options.
How long do you realistically expect to live in your current home?
While this may not seem like an important question to consider, it may impact the potential benefits you experience as a result of a mortgage refinance by determining when your break-even point is. For example, if a home owner hypothetically spent $4,000 to refinance their mortgage, saving $100 per month, they would break even in 40 months. In this scenario, if the home owner realistically expects to live in their current home for more than 40 months, refinancing may be an option worth exploring.
The bottom line.
There are many factors that you should consider when pursuing a mortgage refinancing, including your goals as a home owner. Although rates have risen since the start of the year, they are still historically low, and you may benefit from a refinance. However, not all applicants will qualify for reduced interest rates or monthly payments – so it is important you speak with a licensed Loan Officer to discuss your situation and options. Give us a call today!
This is for informational purposes only and is not an offer to extend consumer credit, nor is it a commitment to lend. Terms and conditions of programs, products, and services are subject to change without notice. All loans are subject to credit and property approval. Certain restrictions may apply on all programs. Refinancing may increase the total number of monthly payments and/or the total amount paid when compared to your current situation. The relative benefits may vary over time and will depend on individual circumstances. Not all applicants will qualify for reduced rates or monthly payment savings. Any opinions expressed in this post are those of the author(s) and do not necessarily reflect the official policy or position of Mortgage Trust.
Mortgage Trust, Inc. is an Equal Housing Lender. NMLS 3250