Refinancing a mortgage. Yes, some folks are considering that after the last year. When rates are low, it can seem like the ideal time to refinance your mortgage. After all, who doesn’t like a lower interest rate? There are lots of good reasons to refinance your mortgage, such as adding on or trying to streamline your expenses, but what’s really involved in the process?
Refinancing a Mortgage: The Basics
Perhaps the best news any homeowner can get when it comes to a refi is that it’s not likely to be nearly as difficult as getting the original loan was. Breathe a big sigh of relief if you need to; this is the time for it.
Many homeowners look to refinance for a few specific reasons. These may include reducing mortgage interest, dropping mortgage insurance, or cashing out for a remodeling expense. When rates are low and values are high, a refinance can provide a dual benefit. Dropping any mortgage insurance you’re currently on the
hook for can make a big dent in your house payment. This is especially true when waiting for it to fall off naturally would take several more years. And, of course, a lower interest rate also means you’re paying less money towards interest over time.
When you combine the two and it can mean big savings. Especially when it's a home you plan to hold over the longer term. Remodeling may be a valid and effective way of adding value. Which is another reason some owners choose to refinance. In short, there are tons of ways a refi can be helpful to your financial welfare.
Related: What is a HELOC?
Marry the Home and Date the Rate
A new term folks have used about refinancing a home is "Marry the home and date the rate". This is a concept rapidly gaining favor.
In short, buy the home now - even if you feel rates are high. If rates go even higher, then you saved yourself a lot of money. However, if rates come down, refinance at a lower rate (which would generally means higher sales prices anyways) and benefit that way. Either way, you come out ahead and own the home you want.
According to Charity Bond of EPiQ Lending, “We have a great program for those who want to ‘date the rate’. It’s called 'Rate Rebound'. - For the rest of this article, please CLICK HERE
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