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Mortgage Refinance in Portland: How the Math Is Changing in 2017

According to the Mortgage Bankers Association, home refinancing activity rose by 11% this week compared to last, as more homeowners completed applications for a refinance loan.

Are you thinking of refinancing your mortgage in the Portland, Oregon area? Wondering if it’s a good time for a refi? Here’s a market update to help you decide.

Related: View current rates for Portland, OR

Mortgage Refinance Update for Portland, Oregon

On May 24, the Mortgage Bankers Association (MBA) reported that the refinance share of total mortgage activity rose to 43.9%. That’s not surprising when you consider that mortgage rates have dropped measurably over the last couple of months.

Rising home prices and relatively stable mortgage rates have allowed a growing number of homeowners to refinance their homes, in Portland and elsewhere across the country.

According to Freddie Mac’s weekly mortgage industry survey, the average rate for a 30-year fixed home loan fell to 4.02% during the week of May 18, 2017. That was a slight decline over the previous week, and 18 basis points (0.18%) lower than the start of this year. So rates have come down over the last few months.

This is one reason more people are able to refinance their mortgage loans in Portland, Oregon. Generally speaking, lower interest rates put more homeowners in a position to benefit from refinancing. This is partly what accounts for the recent increase in home refinancing activity, as reported by the MBA.

Home Prices Still Rising Across the State

Rising home values may also enable more Portland homeowners to refinance their mortgage loans in 2017 and 2018. House prices across the state have risen steadily over the last couple of years. In May 2017, Zillow reported that the median home price in Portland had risen by 10.2% over the previous 12 months, reaching $414,000.

Rising house values give homeowners more equity, which can make it easier to qualify for a refinance loan. This, too, could lead to increased mortgage refinancing in the Portland, Oregon area — especially if we see additional drops in mortgage rates.

Related: Are Portland home prices cooling?

When Does Refinancing Make Sense?

So how do you know if it’s a good time to refinance your home in Portland? When does refinancing work to your advantage, financially speaking? Fortunately, there’s no guesswork involved here. It’s just basic math.

Assuming you want to refinance primarily to reduce your monthly payments, all you have to do is calculate your “break-even” point. This is the point at which your accrued monthly savings (from the new home loan) begin to exceed your upfront closing costs. If you keep the loan beyond that point, it works out to your financial advantage.

To determine your break-even, you’ll need to know the following:

  • How much will you pay in closing costs on the new loan?
  • How much will you save each month after refinancing?

By dividing the cost of the refi by the amount of money saved each month, you can determine how many months it would take to reach your break-even point.

Let’s run the numbers. Could you benefit from refinancing your Portland home in 2017 or 2018? We can help you decide by evaluating your current loan situation and your financing goals. Please contact our knowledgeable staff to get started.

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