Rates Are Starting To Climb, But That Doesn’t Mean You Should Put Off A Refi
As rates begin to increase, the mortgage market is transforming from a refi market to a purchase market. After all, most people refinance to lock in a lower rate, and as the Fed brings rates back to normal, we’re no longer seeing the rush to lock in pandemic-era low rates. However, that doesn’t mean you shouldn’t refinance if it’s right for your situation. In this video, Jamie Cavanaugh lays out five of the most common reasons you might refinance, even when it doesn’t lower your interest rate.
Hey, everyone, it’s Jamie Cavanaugh with Amerifund here with your weekly mortgage update.
Rising rates…what’s a person to do? Yes, this is a purchase market, everyone knows that, but what if you have needs for refinancing, should I consider now, or should you wait?
There are 5 good reasons to refinance, even in a rate rising environment.
So let’s consider these 5 scenarios:
#1 you have credit cards, car loans or other installment loans with high interest rates or high payments. Rolling them into your mortgage and paying them off completely can bring you new found cash-flow. Most car payments and credit cards have shorter terms and higher rates. With a mortgage you can spread those payments over 30 years and reduce your monthly outgo.
#2 Divorce. It isn’t pleasant but it is sometimes a part of life. If one party wants to retain the home and avoid selling, they can do a cash-out refinance to buy out the other party.
#3 Become a property investor! Pull some cash out to purchase a rental property! Take advantage of the current rental market with rents at all-time highs. Many people are buying properties in other states and generating immediate positive cash flow.
#4 Remove Mortgage Insurance either from a conventional or FHA loan. With home equity at an all time high, you might consider a refinance from an FHA loan into a Conventional to remove the costly monthly mortgage insurance and still save hundreds of dollars every month.
#5: Pull out the equity in your home while you still can! Even in a slightly higher rate environment, a 30 year mortgage is still one of the most cost-effective ways to borrow money and leverage the equity in your home. The things I mentioned are all great ways to use your equity – but there are so many others. Start the home renovations you’ve been thinking about, pay for college without taking on student loan debt, the list is really endless.
If you want to know about your refinance options, even in this rate environment, please reach out to our team today, and I’ll see you next week for our weekly mortgage update.