Plunging mortgage interest rates have led to a surge in mortgage refinancing. It's being called the "Brexit Bonus" for American homeowners. The Mortgage Bankers Association reports that total mortgage application volume is 66% higher than a year ago and refinancing applications jumped 21% for the week.
Common sense would tell you that if it's going to help your balance then you should look into it. But what would someone in the mortgage industry tell you? A good lender would tell you is that there is a cost involved and not every situation will qualify. That is why you should talk to a someone like me first. The other piece of this puzzle is that this is an unusual situation! No one expected interest rates to be this low right now and a lot of this is being influenced by the global economy. Can they go lower? Yes. Does it mean they're going to stay here? Not necessarily.
For most homeowners, it's still a good time to refinance. The recent Brexit vote has caused mortgage rates to fall and refinance rates are only slightly higher than the record lows reached a few years ago. Mortgages remain incredibly cheap. Borrowers will even pay less than those who took out new loans last summer.
Let's say you have a 30-year fixed-rate home loan that's charging 5.6%. Refinance at current interest rates, and you'll reduce your monthly payments by about $119 a month for every $100,000 you borrow. The best deal for most borrowers is the one that offers the lowest interest rate, with no points and low lender fees.
Ask yourself this!
- Do you have good credit?
- Is your rate 4% or above for a 30 year mortgage?
- Do you intend to stay in your home for 2-3 years after you refinance?
- Are you considering any home improvement or renovation this year?
- Have you tried to refinance your mortgage within the past few years with no success due to low appraised value?
- Do you pay mortgage insurance?
- Has your property increased in value?
- Would you like to reduce you loan term or pay less on your current term?
If these items relate to you, now is the time to speak to me before it is too late!
We know rates have to go up as economists predicted rates to rise this year, but you have a window. Take advantage and have someone evaluate your options.