Is It Still a Good Time to Refinance?
Should you refinance your mortgage? Interest rates are rising but still low when compared to interest rates over the last several years. Consider that the average rate in 1971 was 7.54 percent.
There is no way to predict whether rates will continue to climb, plateau or dip again, but at Heritage Bank, our team of local mortgage specialists have the experience and tools to help you decide if refinancing will benefit you in the long run. If so, we can help you apply and receive your lower interest rate in as little as 30 days.
Starting the Loan Refinance Process
The first question we'll ask you is why you want to refinance your mortgage. Saving each month with a lower interest rate is certainly a smart reason to refinance, but there are many other benefits (or reasons) for refinancing that you'll want to consider.
Benefits of Refinancing Your Mortgage
Shorten the term of your existing loan.
Switching from a 30-year mortgage to a 15-year secure loan not only allows you to pay off your mortgage faster, it will save you thousands of dollars in interest over time.
Secure a fixed mortgage loan.
If you currently have an adjustable-rate mortgage (ARM), consider switching to a fixed-rate mortgage.
ARMs are always attractive at first because of lower rates upfront, but once those rates expire, your rates are subject to market conditions. Pair this with the unexpected rise and fall of home values, and you could end up paying much more each month. Also, once homeowners pay down their mortgage for a few years and maintain good credit, they can often qualify for a competitive rate that keeps their monthly mortgage payment predictable and affordable.
Tap into equity for other financial commitments.
You may decide to renovate your home to increase its value and curb appeal. Maybe it’s time to buy a new car or send a child to college. Refinancing can allow you to access the equity in your home.
Known as a “cash-out” refinance, this option does carry some risk. if you fail to make the monthly payments after refinancing, you could face foreclosure.
When Should You Consider Refinancing a Mortgage?
Refinancing only makes financial sense if it can help you achieve one of the following goals:
-Reduce your monthly mortgage payments
-Shorten the term of your loan agreement
-Help you build home equity;
-Provide cash for a critical, upcoming cost like college tuition you’d prefer not to finance at a higher rate.
Although rates are higher now than a year ago, you might not have had the credit to qualify the lowest possible rate. Have you improved your credit since? You might have had a better short-term rate through an ARM, but now want to secure a fixed rate or refinance for another ARM with favorable terms.
A common rule of thumb used by many financial experts is to consider refinancing only if you can reduce your interest rate by at least 2%. Working with an experienced mortgage specialist is the best way to determine if refinancing is the right next step. They can help you calculate the total costs of refinancing (including closing costs) versus the amount of money you can save over time or cash out immediately.
How Difficult Is the Refinance Process?
Refinancing is very similar to applying for a mortgage. You'll need to work with a lender to help file your application, complete the underwriting process and close on the loan.
How To Start the Mortgage Refinance Process?
If you want to learn more about how refinancing your mortgage can save you money and enhance your peace of mind, contact our team of mortgage specialists.
We've helped hundreds of homeowners compare rates and find the best refinancing options. Unlike national or mega regional banks, you'll find the type of support, resources and guidance to help you make a decision aligned with your goals.
To get started, or to learn more, contact us today!