The current rate environment presents a great opportunity to homeowners and those looking to purchase or refinance their home. The 30-year fixed-rate mortgage dropped to 3.29% during the week ending March 5, a major decrease of 16 basis points from the previous week, according to Freddie Mac, which has tracked rates since 1971. The 15-year fixed-rate mortgage also fell 16 basis points to 2.79%, according to Freddie Mac. The 5/1 adjustable-rate mortgage dropped only two basis points to an average of 3.18%.
The decline in rates presents a major windfall for millions of homeowners across the country, who stand to save thousands of dollars in interest by refinancing.
Generally speaking, refinancing a loan means taking out a new loan to pay off the previous one, with new terms that suit you. Refinancing is great for getting a handle on your finances. There are several reasons to consider refinancing your home mortgage:
- Lower Your Monthly Payment largely through securing a more manageable interest rate bringing down your payments
- Pay Off Your Home Faster. By refinancing to a better interest rate and shorter payoff time, more of your monthly payment will go towards the principal, not the interest.
- Convert an ARM to a Fixed-Rate Loan to protect yourself from future interest rate changes.
- Cancel Mortgage Insurance.
- Get Cash.
- Consolidate Debt. Many borrowers opt for cash-out refinancing, where they take out a loan for a larger amount and keep the difference, often to pay off other loans—such as credit cards—which have higher interest rates.
- Combine First and Second Mortgages.
There are costs, so decide if mortgage refinance is right for you by weighing the benefits against the costs or reach out to consult with one of our personal and knowledgeable lenders for help in evaluating your situation. Below are the steps involved in making a refinancing decision:
Step 1: Check if it's cost effective. Before deciding if you should refinance it makes sense to determine if you will make up the costs of the fees through the money you’re saving in your monthly payments and if your credit score is good. If the interest rates are low enough, you can save a lot.
Step 2: Use a mortgage refinance calculator. There are many resources available online. You'll get a good idea of what kind of savings you are eligible for taking into account your credit, loan amount, and property value and equity. You'll also be able to see the costs broken down, so you know what you're really paying for.
Step 3: Shop around. Compare the best mortgage refinance lenders, their rates and how long it will take you to pay of the loans they are offering you. Shop around for the right fit and apply to the one that suits you best. Flagship Bank has options that may fit your needs. Contact us for more information.
Step 5: Have cash on hand. Set aside the money you'll need for property taxes, insurance, closing costs, lawyers fees and any other financial obligations you may be required to pay upfront when you take out the mortgage refinance loan.
Step 6: Prepare for closing. Bring your photo ID, the money you need for closing and any other documents your lender requests. You have a 3 day right of cancel, should you decide this loan is not right for you.
The 30-year fixed-rate mortgage dropped to 3.29% during the week ending March 5, a major decrease of 16 basis points from the previous week, according to Freddie Mac, which has tracked rates since 1971. The 15-year fixed-rate mortgage also fell 16 basis points to 2.79%, according to Freddie Mac. The 5/1 adjustable-rate mortgage dropped only two basis points to an average of 3.18%.
If you have equity in your home and are looking for rates and terms that suit your current lifestyle more than your original mortgage loan terms do, refinancing might be a great fit. It's important to take into account the costs and fees, as well as the new interest rate and maturity date. If the numbers add up, refinancing can help you wind up with cash in your wallet for other expenses or with lower monthly payments. If you need help on this journey please reach out as we would be glad to talk.