Interest rates may be on the rise, but refinancing mortgages still seems like an attractive course of action for many home owners. According to a recent Freddie Mac study, however, interest rates are expected to rise to at least 5% by this summer.
John Young of USAA said: “The window hasn’t closed, but homeowners should analyze their mortgage situation to see if a refinance can improve the overall financial picture.”
Young’s point was further supported by Mortgage Bankers Association’s Mike Fratantoni, who added: “When market rates were at 3.5%, 90 to 95% of outstanding loans would have benefited from a refinance.” Now that mortgage rates are higher, only 25-30% of homeowners would benefit.
Some advantages to refinancing include:
-Earlier mortgage pay off, which can save the homeowner thousands of dollars in interest and build equity in your home at a faster rate.
-Additional cash flow, allowing you to pay down debt or budget for other expenses.
-Home equity access, as Diane Brooks at USAA explains: “As home values start to rise, there is some pent-up demand for a cash-out refinance to access the equity in the home for other purposes.”
Many companies, such as Doral Bank, Bank of America and TD Bank, are currently offering ideal mortgage and refinancing rates. As interest rates shift, homeowners have much to consider when planning to refinance.