Mortgage rates are now at their lowest levels in 3 years igniting a flood of homeowners to refinance their existing mortgages. The lower rates are a result of falling bond yields and an uncertain economic outlook in the current financial markets. If you have a mortgage at more than 4% interest, it may be a good time for you to look at your refinancing options.
According to an article published in the Wall Street Journal, 54 million American homeowners could qualify for and benefit from a rate as low as 3%. If you have ever considered refinancing your mortgage now may be the perfect time to explore your options.
Refinancing your existing mortgage may have the following benefits:
- Lower monthly payments.
- Lower interest rate.
- Shorten the term of your loan.
- Make a switch to a fixed rate from an adjustable rate.
- Stop paying mortgage insurance.
- Get cash out by tapping into your home equity.
Types of Refinance
In general, there are 4 types of mortgage refinance options.
- Rate and Term — Where you can lower your interest rate or change the term of your original loan.
- Cash Out — Where you raise the amount of your loan to pay for other expenses.
- Cash In — If you have come into a sum of money you may be able to reduce your loan-to-value amount by making a payment to your loan principal to lower the monthly mortgage payments.
- Renovation Refinance — If your home is in need of repair or a remodel, you may be able to refinance the cost into your existing mortgage.
The type or refinance option that is best suited for you depends largely on your current financial goals and condition. For example, you may want to lower your monthly payment so you have more cash available to you every month. In this case, a “Rate and Term” refinance may be the best option because a lower interest rate may result in a lower monthly payment. Similarly, changing your mortgage term from a 30 year fixed rate to a 15 year fixed rate may save you thousands of dollars in interest payments over the life of your mortgage.
The best way to determine what route is best for you is to talk to a knowledgeable mortgage lender. Contact us today to see if you are part of the 54 million people who may qualify for a rate as low as 3%.
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