IS NOW A GOOD TIME TO REFINANCE?
Is now a good time to refinance is an age old question we don't hear as much these days because rates have been at lows not imagined until now. However, it is a question a home owner should always ask themselves.
Generally if one could save 1% on a thirty year note a refinance was something to seriously consider. This rule is somewhat different now with property values escalating as they have over the last few years the interest rate is only part of the equation.
Of course saving as much on interest rate is important, other savings can be realized by eliminating or greatly reducing private mortgage insurance because the property values have gone up so much.
Another reason to refinance is to change loan programs into one that is more beneficial in the long run. For instance in recent years a FHA loan with a minimum down payment at purchase has permanent mortgage insurance. If you keep that loan 30 years you would have mortgage insurance for thirty years. With higher values, now is a great time to get out of the FHA loan and into a Conventional.
Refinancing to a shorter term is a popular reason to refinance these days. With higher values shortening the term and reducing private mortgage insurance are a great combination.
Sure, interest rates have risen slightly in the last couple of weeks since the lows of the last year, but not significantly so. Now is still a great time to refinance, once the home owner has evaluated their current situation and their long term plans for owning the home.