Episode 67: Is Now The Best Time To Refinance Your Home?
With interest rates averaging close to 3.57% (according to Freddie Mac's latest survey), there hasn't been a better time to refinance in years! Listen to the show or continue reading below to figure out if refinancing is something you should consider:
What does it mean to refinance?
A refinance is essentially getting a new mortgage to replace your original one - only with a better interest term and rate. A lower interest rate can save as little as $30 to hundreds of dollars off your monthly payments. Your original loan is paid off, allowing you to create a new loan. Refinancing can also allow for you to take cash out of your home for large purchases.
Heads up: Most mortgage companies require borrowers to maintain their mortgage for at least one year before refinancing.
What are the perks of refinancing?
- Lower monthly payments: If you plan on living in your home for the next several years, refinancing will be worth it when it comes to savings on your monthly payments. However, if you are planning on moving elsewhere in the next couple years, you may not break even with your refinance & closing costs. It's important to calculate your "break-even point," which helps you decide if a refi is the best option for you financially.
- Get rid of pesty PMI: If you bought your house and put less than 20% down, you are most likely required to pay private mortgage insurance. As the value of your home increases, borrowers may be able to drop their PMI with a refinanced loan (as long as it's not an FHA loan). Be sure to ask your lender if this is an option for you!
- Cash out some of your home equity: As your home increases in value, the opportunity for putting it to cash also increases. You can use a cash-out refi to help purchase a new car or pay down credit card debt. Bonus: This option is also often tax-deductible!
What are the costs of refinancing?
Refinancing generally includes lender fees, title company fees, and the cost of a new appraisal.
Other reasons you may want to consider a refi:
- Current interest rates: Right now, rates are lower than ever, so it's a great time to consider a refi!
- Jumbo loan: If your original mortgage was a jumbo loan, but the current balance of your loan is under $417,000, you may be able to get a "regular" refi with lower rates.
- Credit score changes: If your credit score has improved since your initial mortgage, you may now qualify for a lower rate!
- Home Equity: The more equity you have in your home, the easier it is to get a refi. If you haven't been in your home too long, you may want to wait it out; but if you've earned quite a bit of equity, you're much more likely to qualify for a refi with great terms.
While refinancing can sound complicated, try not to feel overwhelmed! Call John or Andrew today at 512-524-8310 for an open and honest discussion of all your options. We're happy to take a look at your situation and help you decide if refinancing right now is the best idea for you!
If you're interested in taking the next step, just click right here to apply!