Now may be the best time to refinance your mortgage due to recent 2017 interest rate lows. According to the federal home loan mortgage corporation Freddie Mac, “The average rate for a 30-year fixed mortgage was 3.97 percent, down from 4.08 percent last week and the lowest since [last] November.” (source).
This information bodes well for those that are already homeowners paying a mortgage. By refinancing your home you may secure yourself a lower interest rate ultimately leaving more money left in your pocket. If you are stuck in an ARM (Adjustable-Rate Mortgage) loan you have the opportunity to refinance out of the ARM loan and into a fixed rate mortgage loan. This will not only provide a more stable monthly payment plan but also lower your risk from your interest rates going up.
Whatever your reasons may be to refinance your home, now is the time to take advantage of these lower interest rates. Maybe you’re confused on how to go about this process, well don’t worry because by reading this article you are already on step one on your way to refinancing your mortgage and saving yourself some serious money.
Step 1: Research Process
There are many aspects to this step that you will need to research to begin the refinancing process. One aspect is your credit score. Your credit score will determine whether you qualify for refinancing and will help you secure a favorable interest rate. You will also have to see how much equity you currently have in your home. Equity is how determined by taking how much your house is currently worth and how much you owe on your current mortgage. The difference between these two numbers gives you how much equity you have in your home. For
Finally, you need to research if it’s the right time to refinance your mortgage. This is partly based on where the interest rates are currently at, whether they are high or low. Essentially when you are refinancing your mortgage rate you are getting a brand new loan that will pay off whatever you have remaining on your old loan.
What you are left with is a new loan that has an interest rate based on current interest rates. With lower rates than when you originally got your mortgage, you are left with paying less on your monthly payments.
Yet this may be an over-simplification because it also matters on how much money you’ll be saving and how many years you are planning on living in your house. That is why a mortgage calculator is an invaluable tool you can have in the research process.
Step 2: Calculate Your Savings
So now taking all of this information to account you can calculate your savings. You can find a number of mortgage calculators online, some good and some not. The best ones are the ones that take all the information you gathered in Step 1 (try this one). This step will help you see in quantifiable data how much you can save. With this data, you can decide whether or not refinancing your home is right for you.
Step 3: Application Process
After you have gathered all the pertinent information and calculated your savings your next step is easy: apply for the new loan. This is the same process you went through when you originally applied for your first mortgage. It’s that easy!
Here are a few lenders that we found to have the best rates:
Whatever your reasons are for refinancing your home the bottom line should be this: saving money. You should do whatever it is you need to do to save on your monthly payments. Take advantage of lower interest rates as these rates fluctuate and they can rise just as easily as they fall. If anything it is always good to have your finger on the pulse of the market and be constantly looking to see if now is the right time to refinance your home.