Mortgage interest rates have been near record lows this year, and the latest forecasts have rates falling even lower in the coming year. Many homeowners have already been taking advantage of these historically low rates by refinancing their mortgages. If you have not yet refinanced, here are four good reasons why now is the perfect time:
1. Save Money Now and Later
If you took out a home loan at an interest rate any higher than today’s current rates, you could possibly save yourself hundreds of dollars a month on payments and tens of thousands of dollars in interest over the course of your loan. For example, the average borrower got an interest rate of 4.78% just a few years ago in 2018. By 2019, the average fell to 3.9%. By refinancing to the lower rate, a borrower who took out a $300,000 30-year fixed rate mortgage at 4.78% and refinanced to the same loan at 3.9% could save $177 a month and over $36,000 over the course of the loan. Obviously, refinancing now can save borrowers lots of money.
2. Shorten Your Loan Term
Because rates are so low another way to save money on your mortgage loan is to pay it off faster. Now is a good time to refinance into a 15-year loan from a 30-year mortgage because your monthly payments might not be much higher than they currently are. It could be an increase of as little as $15 dollars up to a few hundred dollars, an you could end up saving more than $100,000 dollars in interest in the end.
3. Switch out of an ARM loan
If you started your homebuying experience in an adjustable rate mortgage, you know your introductory low-rate period will not last long. Today’s ultra-low interest rates make it an excellent time to refinance into a fixed-rate home loan that will provide you peace of mind when interest rates do start to climb again.
4. Tap into Your Equity
Americans have more equity on average today than ever before. If you need to pay for a child’s college expenses or go back to school yourself or if you have a major renovation you have been waiting to complete, now is a great time to make use of a cash-out refinance to use some of the equity in your home and still get a low-interest rate mortgage. Cash-out refinances allow you to loan money for any purpose and pay it back slowly over 30 years. Of course, the amount of money you can pull out is based on your total loan-to-value ratio, but if you have a substantial amount of equity, a cash-out refinance is a relatively safe way to borrow money for large projects.
Your individual refinance terms will be determined by things like your credit score and total equity, but with rock-bottom interest rates, now is a great time for all types of refinance loans.
Call us today at 804-424-2200 to see how much you could save by refinancing your home.