Why You Should Refinance Now
People usually start looking to refinance their homes when mortgage rates fall lower than their current loan rate. Just last year, 17 percent of U.S. homeowners refinanced their homes. This data is significant because after all of these people refinanced their homes, another 31 percent of homeowners said they were considering refinancing within the next 12 months. The percentage of people that will refinance within the next 12 months could rise due to how low the current mortgage rates are.
How to Get a Low Mortgage Rate
Right now is the perfect time to lock a low mortgage rate. Fixed and adjustable mortgage rates have risen since the beginning of the year, but all rates remain low. Rates will most likely remain low well into 2021 or maybe longer. To attain the lowest possible rate, you will need to increase your credit score and lower your debt-to-income ratio. If you are financially ready, you can be sure to secure a great mortgage rate.
Why Do You Want a Lower Interest Rate?
Reducing your rate helps you save money and increase the rate at which you build equity in your home. When refinancing, a rule of thumb is if you can lower your interest rate by at least 2 percent, then it is a good idea to refinance. This rule of thumb can vary depending on who you ask, as many people say that even being able to reduce it by 1 percent is good. A low interest rate is great for homeowners because it will reduce their monthly mortgage payments. Having a lower interest rate means having more spending money in your pockets!
Refinancing to Shorten Your Loan Term
When interest rates fall, people refinance to get a significantly shorter term. One thing to keep in mind when refinancing for a shorter term is that you will have to pay a higher monthly payment. Many people see refinancing for a shorter term as a win-win situation because you can save on interest and pay off your home sooner. Before you jump into this option, make sure you feel confident in making a bigger monthly payment.
Refinancing can be a great financial move if it reduces your mortgage payment or shortens your loan term. You may be able to get your debt under control if you use this tool carefully.
Contact us today if you have any questions!