Low-interest rates definitely mean that it is the best time to refinance your home loan. Because the main aim of refinancing is to ease the payments to be made on the mortgage. This is possible, only if the interest rate lowers and the payment term gets extended. A refinance program not only helps you lower the interest rate but also to fix it or change it into a variable one if required. So, according to market watchers, this is the best time to refinance your home. As per the recent reports, the interest rate of the most popular 15 year fixed rate mortgages fell below that of 3%.
Refinancing – How does it help?
People do opt to refinance their homes if they fear losing it. While taking out a home loan, both the lender and the homeowner are required to agree to the terms of the loan. If anyone of the party fails to stick to the terms, it can result in legal hassles. So, if you as the homeowner and the mortgage borrower fail to stick to the terms, the lender can take away the home. He can foreclose it, take it away and sell off, to get back his money. This is possible, only because the lender has the title to the home, as it is his money you have used to buy the home.
Thus, taking out a refinance home loan is one of the options that can help you retain your home. Under this program, you are required to take out a new home loan, in order to change the terms and conditions of the primary mortgage. The target is to take out a new mortgage that has a comparatively low-interest rate, and in addition, a longer loan term.
Which is the best time to refinance?
So, when is the time to refinance your home? Though, people usually refinance their home during times of cash crunch, or when they would badly want to retain their home; many do opt for the same just to save money on mortgage payments. Keeping all of these factors in mind, the best time to refinance home loan is when the interest rates of the mortgages are low.
However, interestingly enough there are various other things, that are to be kept in mind while trying to obtain a refinance loan. One is that the interest will have to be low. Second is, the home value should be good enough for you to borrow more money on it. The third most important thing to be considered is your credit score. The process of taking out a home loan, in order to refinance your home is the same as that of taking out any other mortgages.
What is the current state of mortgage rates?
The rates of the 15 year fixed rate mortgages lowered to 2.9%. In the history of the 15 year mortgages, this is the first time when the rates have lowered to this point since Freddie Mac has started with the program of tracking the weekly data on the mortgages.
If the scenario of the past year is considered (of around the same time), the rate of the 15 year fixed rate mortgages were about 3.74%. So, this is going to lower the cost of refinancing mortgages by around $689 per month, on every $100,000 borrowed. Ultimately, this is going to help save $37.
According to the reports by the Mortgage Bankers Association, mortgage refinances applications have increased by 1.3%. So, this is a good time, if not the best (depending on the affordability of the people, their credit situation and the home value), for refinancing your home.