Summary: If refinancing your mortgage is on the agenda but you’re still on the fence about it, there are some reasons why you should consider taking the leap. This article will explain what those are.
Given the current low interest rates today, you can save a ton of money by refinancing. In fact, rates have recently reached new lows, dipping down to 3.29% as of the time of this writing. Refinancing a mortgage is a golden opportunity to lock in today’s low interest rate for the next 15 or 30 years.
1. Carrying A High Rate
Anyone with an interest rate well above today’s level should think about a refinance. Odds are, your current interest rate is higher than the going rate today. As mentioned, the current mortgage interest rate is very low right now. Even a 1% difference in mortgage rates can save you tends of thousands of dollars in interest over the life of your loan. Unless the you are planning to sell soon, a refinance will almost always save you 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 you have 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 (ARM) sticks only for the first few years of the mortgage. After this point, the rate adjusts each year based on market trends. For instance, a 5/1 ARM means that after the first 5 years of your mortgage, the rate will adjust every year after that.
Rather than paying the adjusted rate, which is almost always higher, you can refinance into a new fixed rate mortgage to lock in one of today’s low fixed rates for the duration of your 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 About Refinancing Or Other Loan Programs?
If you’re curious about refinancing or have questions about other mortgage programs, we’d love to help. Sammamish Mortgage is a local, family-owned company based in Bellevue, Washington and offer mortgage programs to borrowers in the entire state, as well as Oregon, Colorado, and Idaho. Please contact us if you have mortgage-related questions.