As the COVID-19 pandemic started slowing down the economy in early 2020, mortgage interest rates also started to go down. Today, mortgage rates are historically low. If you currently have a home mortgage, it’s an ideal time to consider a refinance. The best thing you can do is talk with your mortgage banker and get a complete rundown on your current situation and what a refinance will do for you.
Here are some reasons to consider refinancing your mortgage while interest rates are historically low.
Lower your current mortgage interest rate – We are in a market right now where the rates are historically low. If you have a current mortgage, you’ll want to check with a mortgage banker to determine if you can refinance to a lower rate and save money.
Lower your monthly payments – Oftentimes when you refinance to a lower rate or different mortgage terms, you can lower your monthly payments. This affords you the opportunity to have extra cash on hand that used to go toward your monthly mortgage payments.
Lock into a fixed rate – If you are in an adjustable rate mortgage (ARM) or a balloon mortgage, you most likely are in this type of mortgage because of the lower interest rate you were afforded when you bought your home. Now that interest rates are historically low for fixed rate products, it’s a perfect time to consider locking into a fixed rate mortgage where your terms, rate and payments will not change during the life of the fixed loan.
Change your fixed rate – Because interest rates are at an all-time low, now is the time to think about moving into a shorter term fixed rate because you can save more money on interest over the life of the loan. For example, if you are in a 30-year fixed rate, it might be a good time to look into moving into a 15-year fixed rate.
At the same time, if you are in a 15-year fixed rate, and your financial situation has changed to where you are feeling a little stressed financially, it can be a good time to consider refinancing into to a 30-year fixed mortgage to reduce your monthly payments.
Refinance with cash out – When rates are historically low, and you have earned equity in your current home, it might be an ideal time to consider refinancing with cash out. Taking cash out during a mortgage refinance allows you to start that remodeling project you’ve been dreaming about over the years like a new kitchen, improved landscaping or finished basement.
In addition, you might also consider refinancing with cash out to consolidate debt. If credit card debt, medical bills or student loans for example have stressed you financially, it might be beneficial to talk with a mortgage banker about refinancing with cash out to consolidate your debt into one monthly payment. You will definitely need discipline, especially with your credit cards, with this option so you do not incur further debt if possible.
Stop paying PMI insurance – If you are paying private mortgage insurance right now, it might be a good time to see if you have enough equity in your home to refinance to a lower rate without having to pay PMI. You can potentially save money with a lower rate and lower monthly payment by removing the need for paying PMI.
The best person to help you decide if you should refinance today while the rates are historically low is a mortgage banker. A mortgage banker can look at your financial picture and give you a good idea of your options to save money now, in the long term and possibly both. The mortgage bankers at Kalamazoo County State Bank are happy to review your options. They are experienced, local and know your community marketplace. Call today at 269.679.5291 or visit online at https://kcsbank.com/mortgages/.
Kalamazoo County State Bank is an Equal Housing Lender.
