With low mortgage rates and steadily rising home prices, 2017 might be a great time to refinance a mortgage loan in Portland, Oregon. Here’s a roundup of recent market trends to help you make an informed decision about refinancing.
There’s a Good Chance Your Home’s Value Has Risen
It’s an understatement to say that Portland home prices have risen. The truth is they’ve climbed steadily in recent years, reaching levels never before seen. According to the latest data from the S&P Case-Shiller Home Price Index, house values in Portland, Oregon are higher now than they’ve ever been before (as of late summer 2017).
This is good news for those who are thinking about refinancing a mortgage loan in Portland. As a result of this trend, you might have more equity now than when you first purchased the home — maybe a lot more. And having positive equity is usually one of the key requirements to refinance a home in Portland, or anywhere else for that matter. This means a larger pool of Portland homeowners could now benefit from a refinance.
According to the real estate information company Zillow, the median home value for Portland rose above $415,000 last month. In September 2017, prices were up 5% year-over-year, based on the company’s data. Looking forward, they expect house values in the area to continue rising into 2018.
Refinancing in Portland in 2017 vs. 2018
Portland homeowners refinance their homes for different reasons. But most people use refinancing as a way to secure a lower mortgage rate and reduce their monthly payments going forward. And now might be a great time to accomplish that goal.
A home refinance makes sense if you can reduce your interest rate by half a percent or more. But that’s just a general guideline. The best way to determine if refinancing will work to your advantage is to compare the costs of the refi to the amount you will save going forward.
We can help you figure out if it’s a good time to refinance your home in Portland by determining the break-even point. This is the point at which the money you save (by securing a lower interest rate) begins to exceed the amount paid in closing costs.
This timeframe will vary from one homeowner to the next, depending on the current mortgage rate, the rate assigned to the new loan, and the amount of closing costs.
Paying Points for a Lower Mortgage Rate
Some Portland homeowners who refinance their mortgage loans choose to pay points in exchange for a lower interest rate. Depending on the financing scenario, this could enable the homeowner to save money over time by paying less in total interest.
In this context, a “point” is equal to 1% of the loan amount. Home buyers and refinancing homeowners in Portland sometimes pay points to secure a lower rate. You can think of it as a form of prepaid interest. You are paying more upfront in order to reduce the rate and the monthly payments over the long-term. The longer you stay in the home, the more paying points makes sense.
Speaking of mortgage rates, a recent industry forecast suggests that loan rates could rise gradually over the coming months. Based on this outlook, a case might be made for refinancing sooner rather than later.