Turn on any radio station or watch TV in the evening and you’ll be bombarded with commercials offering incredibly low interest rates to refinance your home. These rates may sound enticing, and you may be wondering if it’s time to refinance your home loan. Mortgage rates are on the rise this fall after nearly a year of record lows, possibly providing a nudge to homeowners who want to refinance but didn’t get around to it yet. While refinancing can make financial sense in some situations, not everyone will benefit.
If you haven’t refinanced yet, is it still worth it? Homeowners have a lot to consider before signing that application. Does it still make sense to call up your lender and file an application? Most people consider refinancing to lower their interest rate – even a slight change in the interest rate may add up to significant dollars over the life of the loan. When evaluating the new loan, remember to add in any additional costs. Ask if you will be responsible for closing costs or appraisal costs before jumping at a lower rate. The length of the loan is also important to review. Are you restarting the clock on a 30-year mortgage? It’s recommended to not refinance for longer than the years remaining on your current loan.
One great reason to refinance is to eliminate PMI (private mortgage insurance) or convert from a variable-rate loan to a fixed-rate loan. First-time borrowers may have had limited options for the original loan, but now with more equity and perhaps stronger credit, a refinance can put these borrowers into a better loan. A refinance can also offer a way to consolidate higher-interest debt by pulling equity from the home to pay off credit cards or car loans. Refinancing offers are everywhere. It may still be a great time to take advantage of lower rates and lock in savings, but remember to consider all the costs associated with a refinance before assuming it’s a good financial decision.
Please reach out if you are looking to connect with one of our trusted finance partners. With over a decade of experience we work with several qualified professional mortgage officers who can help with your refinance options and details. Contact Us to start the conversation on your goals and maybe even pull some of your home’s equity for additional property! We look forward to helping guide you to the right mortgage professionals based on your current situation.