Reasons to Refinance in 2014
Is Refinancing Now a Smart Homeowner Move? The Market Says Yes.
Buyers and sellers alike are constantly scouring mortgage news sites for information on mortgage rates and their trends. Government loans, such as Freddie Mac, are scrutinized each day. Where mortgage rates used to hover in the 6 percent range, a current evaluation places those same rates in the 3 percent field. Fifteen-year rates are at 3.17 percent, whereas 30-year options are at 3.99 percent. Although it’s much easier to sit back and hope for another drop, there are certain situations where a refinance makes sense now.
Federal or Private Mortgage Insurance Charges
When you don’t have a large down payment on a home initially, lenders usually add a MIP or mortgage insurance premium to the monthly amount. This insurance isn’t for you, but is to help the lender recoup costs if the loan defaults. Both FHA and private home loans use this insurance so refinancing is a way to remove the premium permanently.
Credit Card Balances
Refinance the home and use a small payout to pay off any outstanding credit card bills. Paying interest on credit cards is wasted money. The interest on the home is tax deductible in many cases when income tax season comes around. Managing just one debt through the bank allows you to reduce costs while still paying the amount faithfully.
Older Loan
If your loan is older than May of 2014, consider a refinancing package. All rates before this date are relatively high. Even a drop of one percent from your original rate saves you hundreds of dollars a year. A lender can help you do the math based on the loan amount and percentage rates. Extra money from the refinance can go toward boosting the local economy with more consumer dollars to spend on other items.
Home Improvement Time
If the house could really use an exterior paint job, hiring contractors is usually necessary because of the job’s difficulty level. Refinance with the lower mortgage rates to free up funds for home improvement. The benefit of this strategy is a higher home value. Almost any improvement adds some value to help during selling periods.
From cancelling extra insurance to just easing payment amounts, refinancing in today’s financial market is a bright light of opportunity. Speak to your lender about the right loan for your needs. If you have a steady income and accounts in good-standing, a loan is easily found and funded by the right professionals.
