Ready to Refi?
Happy February! The groundhog saw his shadow, which means six more weeks of winter, but spring is just around the corner! As we transition from one season to the next, you may be thinking about changes in your own home. I’ve recently posted about cleaning and decluttering. You may want to do that again, so here is the link. But, maybe you have another big change in mind – refinancing your home!
Home values are determined by many things, one of which is the comparable value of homes nearby. In a sought after community, homeowners can see their values skyrocket. This is the perfect time to refinance your mortgage! Not only could you find yourself with equity in your home, but you could also be in a position to save money by taking advantage of historically low mortgage rates.
One word of caution – choose your lender very carefully. Popular e-lenders like rocket mortgage will only see you as a number. Instead, forget the competition and come straight to the source. At your credit union, we’ve got a product that meets every budget. Not only that, you’re not just a number with us.
Just a few years ago, a great rate on a 30-year mortgage was in the 3.9% - 4% range. I suppose if there is anything good that came out of the pandemic is that the rates have dipped even more. Now, a great rate would be in the 2% - 3% range. Of course, you will see the biggest bang for your buck if you opt to refinance and pay off your home equity loan or second mortgage currently held at a higher rate (assuming you have enough equity to do that).
Regardless of whether you are thinking of buying a new home or refinancing a current mortgage or home equity loan, here are some things you will want to keep in mind:
· Are you planning to stay in your home for more than three to five years? Knowing this ahead of time can help you and your lender find the right product for you. If you plan to stay in a home for just a short time, an adjustable-rate mortgage (ARM) may be the perfect fit. I know what you’re thinking…an ARM is scary! The truth is -- it doesn’t have to be! When we bought our current home, we knew we would live here for no more than seven years. That knowledge allowed us to select the product with the best rate – in our case, a 15/15 ARM.
What is your goal? Do you want to save on your monthly payments? Are you swapping your 30-year mortgage for a 15-year mortgage? Do you want to ditch your ARM for a fixed rate? These are all important factors to consider before making your decision.
Shop around! Don’t think that all lenders will offer you the same rate and terms for your loan.
Just because a lender claims to be as fast as a rocket, doesn’t mean they are a good choice. Your credit union will always have your best interests in mind.
Having equity doesn’t always mean you want to borrow against it. Yes, there is a light at the end of the COVID-19 tunnel, thanks to the vaccines that are being administered; but, that doesn’t mean that we are out of the woods in terms of the pandemic’s impact on the economy. Instead of cashing in equity, you might want to keep it available for a rainy day or your child’s college education.
Your situation is unique, and I encourage you to call one of our Mortgage loan officers at 888.774.9361 or speak to one of our certified financial counselors on staff to draw a plan that fits your needs.
Please leave me a comment or email me directly! I would love to hear your thoughts on this post!
Krista Kyte is a personal finance blogger and personal banker with over 18 years of experience in the financial industry. Krista is passionate about helping our members understand their financial situations. She writes tips that will help consumers reach and maintain financial security, and start living the life they’ve always wanted.
