While historically low interest rates are undoubtedly enticing, refinancing might not have been on your radar. If low interest rates caught your eye, how can you know that this is a perfect time? What if rates drop further? When will they start to rise?
Many people miss an opportunity to save as they wait on the market to hit the absolute bottom. The truth is, no one can predict what interest rates will be tomorrow, much less than one month from now.
Why pay your higher rate day after day, gambling on a future dip in rates that may not occur?
When Should You Refinance?
We understand that securing the absolute lowest rates could give you something to brag about when you play tennis or golf with your friends, but that’s not the best way to save money. Every situation is unique, but in general, if your rate is 0.5% to 1% higher than the current market rates, it’s worth your time to investigate your options.
If your rate is more than 1% higher than the current rate, it is almost certainly time to refinance. If you are 0.5% to 1% higher than the current rate, you might want to contact a mortgage specialist to discuss how long you plan to live in your current house and other factors that affect your decision.
Factors To Consider When Refinancing
Refinancing a home can be an attractive option, but there are many factors to consider. Here are a few key questions you should ask yourself as you consider this opportunity.
- How much could you lower your interest rate?
- Would you prefer to pay off your mortgage more quickly or lower your monthly payment?
- Do you have enough equity in your home to secure a loan that doesn’t require mortgage insurance?
- Do you need to convert an adjustable-rate mortgage (ARM) to a fixed-rate mortgage while rates are low?
- Do you want to access some of your home equity with a cash-out refinance to pay for a large purchase or consolidate debt?
If the answer to any of these questions is “yes,” then refinancing is something you may want to consider.
The Bottom Line
Refinancing your home is well worth your consideration if it could decrease your mortgage payment, loan term, or help build equity faster. Right now, mortgage rates are at one of their lowest points in history. They can’t get much lower, and it’s only a matter of time before they climb back up!
If you want to take the next step in refinancing your home, MortgageRight will help you find the right loan for your needs. Give us a call at 205-776-8401 or email us at email@example.com.