The recent drop in interest rates has created a number of great opportunities. Here are the top 5 reasons to refinance now:
1. If you are on a fixed income, starting a business, or have looming expenses
Consider refinancing into a longer term loan to help ease the monthly payment burden. You may even find that you can keep your payment the same, but put tens of thousands in your pocket instead.
Note: don’t lose sleep thinking you’re “starting over.” Remember the term simply sets your minimum payment due, you can always pay more. You’re freeing up mental and physical capital to enjoy retirement, invest in your new endeavor, or wisely prepare.
2. If you last purchased or refinanced in 2013, 2014, or 2018
Believe it or not, current mortgage rates may actually be LOWER than what you have now! Many believe the Fed rate increases dictate mortgage rates, but first mortgage rates are primarily determined by bond market movements.
If your circumstances have changed since you closed, such as credit score improvements or increased income, it’s definitely time to see if you qualify for a better loan.
Another aspect to consider is that loan limits have increased notably in 2019. The standard Fannie Mae limit is now $484,350, the highest ever! It’s possible you now qualify for better programs, lower rates, and easier guidelines.
3. If you pay Mortgage Insurance (MI) or have an ARM
Values have increased notably the past few years so if you pay mortgage insurance, it’s time to look into reducing or eliminating it. If you have an FHA loan with MI for the life of the loan, try to refinance into a conventional loan.
For those with ARMs, especially if you obtained them 3+ years ago, it’s time to consider a fixed rate. Most expiring ARM’s are adjusting to rates HIGHER than fixed rates. If you plan to stay in your home indefinitely, take advantage of this window. It may be the last opportunity before the rate and payment adjust.
4. If you have high interest debt or an equity line
If you have high interest debts such as credit cards, personal loans, and student loans, your chariot has arrived. Values are on high and rates have dipped, so strike while the iron is hot! There is most likely savings awaiting you right now, especially if you’re a veteran.
For those with equity lines, this is the rare market where fixed mortgage rates can actually be lower than equity line rates. Consider consolidating that debt into a new fixed rate loan, your future self will thank you.
5. If you are contemplating a second home or investment property purchase
If concerns over rates have discouraged your purchasing plans, use this window to capitalize. While prices remain elevated, there are good deals to be had in EVERY market. Now you can get a great deal and a great loan to go with it.
Investment tip: consider expanding your real estate portfolio by using your California equity to acquire out of state properties. It can help diversify your portfolio and yield positive monthly cash flow.
