Since the beginning of the COVID-19 pandemic, Adam Leitman Bailey, P.C.’s banking department has been busy serving both our lender and borrower clients with refinancing and purchase closings consisting of rates downward of 3%. This drop in mortgage rates was a tremendous help to both homeowners who needed to lower their interest rates and purchaser’s trying to secure a home in such a difficult time.
However, two years later, rates have started to rise back up. Borrowers, who did not take advantage of the low rates in the last two years have recently begun to ask if now would be a good time to refinance. There are several factors that come into play when answering this question. First, although the interest rates have increased, they still may be lower than the rate on your current mortgage and you may still be able to take advantage of these low rates with a refinance. A refinance now may still save you money!
Additionally, a borrower may want to refinance now if he or she has debt to consolidate or may need a cash-out to refinance to make home improvements. The rates are still at historic lows and a refinance can help to accomplish these goals. Further, a borrower could also refinance now to shorten the term of their current loan, this will allow the borrower to pay off their mortgage quicker and overtime pays less interest. A borrower may also want to take this opportunity to refinance to convert their current adjustable rate to a fixed rate to give the borrower more peace of mind.
Lastly, a borrower may currently be paying private mortgage insurance AKA PMI and has now reached his or her goal of 20% equity in their home. This borrower may want to seek a refinance to eliminate paying this PMI.
Overall, there are many financial factors to consider when deciding whether or not now is a good time to refinance. This should be discussed in detail with your mortgage loan officer. The banking department at Adam Leitman Bailey, P.C. is always here to help as well.