Is It the Right Time to Consider Refinancing Your Home?
If you are a homeowner who happened to miss the last boom in refinancing, you can get in on the action now.
Freddie Mac conducts weekly surveys and their last one showed that the average interest rates on a 30 year fixed mortgage are at the lowest that they have been in more than a year and a half.
In fact, they are near to the lowest they have been at in nearly half a century.
While that is good news for those wishing to purchase a home or refinance a mortgage, there is also a downside to it.
That downside is simply that these rates will not be around forever.
In fact, the Mortgage Bankers Association predicts that by the end of this first quarter in 2015 they could be on the rise again and by the end of the year be sitting at close to 5%.
In addition to that prediction, the mortgage industry trade group predicts interest rates of 5.
4% before 2016.
Taking all of that into account, refinancing a mortgage could actually save you a bit of money if you get in on the low interest rates.
However, you need to be aware of exactly how refinancing works.
How It Works Refinancing a mortgage is a simple thing to understand.
It consists of taking out a new mortgage with lower interest rates in order to pay off your existing mortgage.
You end up still having only one payment and it will typically be a smaller one.
Some Things to Consider
There are also mortgage calculators online that will help you determine what your monthly payments might be should you decide to refinance.
Freddie Mac conducts weekly surveys and their last one showed that the average interest rates on a 30 year fixed mortgage are at the lowest that they have been in more than a year and a half.
In fact, they are near to the lowest they have been at in nearly half a century.
While that is good news for those wishing to purchase a home or refinance a mortgage, there is also a downside to it.
That downside is simply that these rates will not be around forever.
In fact, the Mortgage Bankers Association predicts that by the end of this first quarter in 2015 they could be on the rise again and by the end of the year be sitting at close to 5%.
In addition to that prediction, the mortgage industry trade group predicts interest rates of 5.
4% before 2016.
Taking all of that into account, refinancing a mortgage could actually save you a bit of money if you get in on the low interest rates.
However, you need to be aware of exactly how refinancing works.
How It Works Refinancing a mortgage is a simple thing to understand.
It consists of taking out a new mortgage with lower interest rates in order to pay off your existing mortgage.
You end up still having only one payment and it will typically be a smaller one.
Some Things to Consider
- What is the equity in your home? Many times it is difficult to refinance your mortgage if you don't have at least 20% equity in your home.
However, there are programs that can assist you with less than that percentage.
They are the FHA Streamline Refinance and the VA Streamline Refinance.
Keep in mind though that these options are only available to those who have existing FHA or VA loans. - What is your interest rate right now? If your interest rate is higher than what the current interest rates are then it might make sense to refinance and take advantage of the savings.
However, remember that there will be closing costs involved and if the savings from the interest rates do not at least cover the cost of closing then you will not be saving anything at all and might even lose money. - How soon do you want to own your home? If you decide to refinance, your payments might go down.
However, you might be able to work it out to where you are paying nearly the same as you currently pay but for a shorter period of time.
There are also mortgage calculators online that will help you determine what your monthly payments might be should you decide to refinance.
