Should I Refinance my Home?
Refinancing can be confusing. However, you can save money up front and in the long term if you refinance for a lower APR. Maybe you’re nervous that now isn’t the best time because you’ve heard different opinions on the economy, but now may actually be a great time to start.
The Federal Reserve Rates are Lower
The Fed doesn’t actually affect mortgages directly, but their actions do indirectly affect us. According to an article on bankrate.com, “the Fed will be keeping interest rates low for the foreseeable future. Fixed-rate mortgages are tied to the 10-year Treasury rate. When that rate goes up, the popular 30-year fixed rate mortgage tends to do the same and vice versa.”
Rates Have Been Lower
While the pandemic has put people in a panic, it has brought lower interest rates with it for home buyers. Taking advantage of these historically low rates is in your best interest as they are sure to rise over the upcoming months. 15-year mortgages are also at an all-time low which could be good news for those who have a 30-year mortgage that is highly paid off. A homeowner could refinance their 30-year mortgage down to a 15-year and save money PLUS play the loan off years sooner.
Similar Interest Rates Between Fixed and Adjustable Loans
An adjustable-rate mortgage usually has a lower interest rate at the beginning of the loan and then the APR changes with the rates in the market each year, usually increasing over time. Since 2020 brought many strange situations with it, it’s no surprise that this is showing in interest rate trends. A good amount of 30-year fixed mortgages are as low as the beginning rates those with current ARMs had. So, an older mortgage that is refinanced now could have huge savings.
The Takeaway
Refinancing sooner than later may be the best bet for many homeowners. If it will help pay the loan faster, save money, build equity, or provide peace of mind then absolutely look into getting the loan refinanced. Your loan officer can look at your current mortgage and figure out what your best option is.
