Summary: If refinancing your mortgage is on the agenda but you’re still on the fence about it, here are four reasons why you should consider taking the leap.
Refinancing a mortgage is a golden opportunity to lock in today’s low interest rate for the next 15 or 30 years. While interest rates now are still low, there’s a good chance they will be heading up in the coming months.
The Fed won’t maintain the current bond purchasing level forever, and even though the Federal Reserve chose to keep rates unchanged at its last meeting in June, rates won’t stay down forever.
1. Carrying A High Rate
Anyone with an interest rate well above today’s level should think about a refinance. Unless the homeowner is planning to sell soon, a refinance will almost always save money in the long run.
2. Switching From FHA To Conventional
Given that FHA mortgages now carry mortgage insurance premiums for the life of the loan, it makes a lot of sense for borrowers to switch away from them when they can. Refinancing may be possible once the homeowner has built up enough equity to qualify for a mortgage from a traditional lender, without the burden of mortgage insurance.
3. ARM Coming Up On Adjustment
The low rate of an adjustable rate mortgage sticks only for the first few years of the mortgage. After this point, the rate adjusts each year based on market trends.
Rather than paying the adjusted rate, which is almost always higher, homeowners can refinance into a new fixed rate mortgage to lock in one of today’s low fixed rates for the duration of the mortgage.
4. Cash Out To Consolidate Debt
Homeowners carrying high-interest debt, like credit cards and personal loans, can often benefit from consolidating it into their mortgage. As long as they maintain at least 20 percent equity in their home, they can get a cash-out refinance for an amount higher than their current mortgage balance.
They can then use the difference to pay off high-interest debt. For more information and reasons to refinance your mortgage feel free to contact us today.
Have questions? Sammamish Mortgage is a local, family-owned company based in Bellevue, Washington. We serve the entire state, as well as the broader Pacific Northwest region. Please contact us if you have mortgage-related questions.