It’s not easy when you’re sitting on the fence trying to decide whether you want to refinance your home or not. The grass looks greener on both sides at different times and being stuck in the middle can feel like a never-ending struggle. Unfortunately, if you keep straddling that fence indefinitely, it’s going to hurt eventually.
The more you know about your options and how to choose the best time, if any, to refinance your mortgage, the better prepared you’ll be to make an important decision about your financial future. These are a few reasons why you might want to refinance now – while the getting is good.
Interest Rates are Still Low – Even though They are On the Rise
Some cities are beginning to see the first signs of rising interest rates. In fact, May 2018 saw the highest mortgage interest rates in seven years, according to USA Today. Depending on when you purchased your home, there’s a good chance these interest rates are still lower than your existing mortgage.
That means that now is the perfect time to refinance your mortgage, before rates rise even further, eliminating one of the biggest benefits for refinancing a mortgage – lower interest rates and lower overall payments on your mortgage.
All eyes are on the rates continuing to rise as the year 2018 progresses. This means the sooner you begin the refinance process, the faster you can lock in lower interest rates. Waiting too long could leave you without a really good reason for considering a refi loan.
The Bubble May Burst (AGAIN) and You Want to Cash Out Before It Does
You can hardly turn on the news these days without hearing someone talking about how the housing market is once again ripe for a bubble bursting. The last time that happened it sent home values plummeting and took nearly a decade to begin seeing light at the end of that long, dark, financial tunnel.
If you’re considering a cash-out refinance loan to take advantage of equity in your home, now may be the perfect time to take the plunge. If the bubble does burst, it will devalue your home and you could find yourself upside down on your mortgage as so many did in 2007 and 2008 when the bubble burst occurred previously.
While there are no hard and fast rules about housing bubbles bursting, there are a few indicators that the conditions are ripe for problems on the horizon. We are still dealing with incredibly low interest rates, housing prices are on the rise, and in many metropolitan areas the demand for housing is far outstripping the supply.
You Want to Reduce Your Loan Term
Circumstances change. Perhaps you have a better job. Or maybe you’ve inherited money from a relative – or even taken home one of the lesser lottery prizes and hope to reduce the length of time (and overall money) you’ll pay for your home. Refinancing to go from a 30-year mortgage to a 15-year mortgage can save you huge amounts of money on your home. We’re talking tens of thousands of dollars, if not more.
On the flip side of the equation, some people need to extend the terms of their mortgages to create a little budgetary wiggle room each month. In this case, you might consider going from a 15-year mortgage to a 30-year mortgage. It will cost considerably more in the long run. However, it may be the difference that allows you to keep your home when things get tight.
Switching from an Adjustable Rate Mortgage to a Fixed Rate Mortgage
This is definitely a worthwhile consideration for people who have adjustable rate mortgages facing reassessment soon. With interest rates on the rise (and showing no signs of slowing) adjustable rate mortgage holders are growing nervous. You can end the speculation and worry and make the switch to a fixed rate for your mortgage.
You may pay a little more, initially, as an interest rate, but may gain incredible peace of mind. The kind of peace of mind that comes from knowing your interest rates can’t suddenly rise sufficiently to price you out of your home.
Home mortgage refinance loans can, in the right circumstances, be the perfect solution for many mortgage woes. The more you know about your options, the better informed decisions you can make about your personal need for a refinance loan and the best type of loan to meet your needs without creating pain in other areas of home ownership.