Spring has not sprung in Michigan just yet!
With the weather in a holding pattern and most Michiganders working from home, now is the perfect time to prepare your funds for when the weather breaks. Rather you are planning a trip in the upcoming season, and need to take cash-out or wanting to do a “spring cleaning” on those high-interest credit cards, refinancing your mortgage can put you in a much better financial position.
Here are 4 reasons you should refinance before spring:
Get rid of unwanted high-interest credit card debt
While having credit cards make purchasing high priced items a breeze, having to pay the monthly minimum on a card with high interest can be daunting. Paying on the interest and not the principle is just band-aiding over the problem and will send you further into debt. That doesn’t have to be you! The good news is that if you refinance right now, you can pay off your credit card completely and go into spring debt-free.
Cash is king! With the weather warming up comes the opportunity to take advantage of spring home improvement projects. Don’t use your tax return to fund building a new porch or a patio. Instead, you can simply refinance and take cash out of your home’s equity. Taking cash-out can also be spent on planning a nice spring or summer vacation without the stress of going into debt to do so.
Lower your monthly mortgage payment
What is better than not having to use credit cards? Cash! Even with a few weeks left of winter, you can still close on the refinance of your home loan before spring! Lowering your monthly mortgage payment means more cash in your pocket.
Rates are low
You’ve heard us say it for the last several months and its true, RATES ARE STILL HISTORICALLY LOW. Rates are the lowest they have been in a decade. The reason you need to act now is because we don’t know when rates will rise again. The housing market can be very unpredictable… take advantage today and contact one of our mortgage experts to receive a free 5-minute mortgage review.
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As you know the Federal Reserve just announced that interest rates are holding steady! The goal of the committee is to maintain the target range for the Federal funds rate. This is to support the expansion of economic activity, strong labor market conditions, and favorable inflation.
Why should YOU pay attention to this?
A couple of reasons:
- You’ll be informed on the state of the economy
- You’ll gain knowledge on the state of the job industry
- Paying attention will keep you up to date on the rate of inflation
- If you own a home, it lets you know if you can be saving money by refinancing to get a better interest rate
- If you are looking to purchase a new home, you want to purchase while rates are low
The next meeting is on March 17th & 18th.
The mortgage industry has been experiencing an amazing year so far. The Federal Reserve (FED) has continued to cut rates. Need proof? Last week the FED dropped rates another quarter percent, we are currently hovering at a 2-2.25% rate.
What does that mean for you?
Well if you are looking to purchase you have the ability to buy more home for your money; however, if you are looking to refinance you are looking at saving money over the life of your loan, on top of potentially being able to lower your term.
Refinancing is one of the various ways you can utilize to help save money overall; however, if you find yourself needing alternative options and are looking to be proactive in your home financing needs, here are a few out-of-box ideas.
- Buy a Cheaper House – this is self-explanatory, learning to live below your means is a valuable lesson to learn and helps you budget more efficiently.
- Choose a Bi-Weekly Payment Option – Most loan servicers provide this option. When you choose to go this route, you end up making 26 payments a year; which adds up to you paying 1 extra payment towards your principle each year.
- Choose an ARM – this option is great if you don’t plan on living in your home very long. What’s the point of fixing yourself in a 30-year term if this isn’t your forever home?
- Extend Your Repayment Term – Example if you are in a 15-year term you can switch to a 30-year; this doesn’t change the amount of your loan but will overall lower your payments because you are extending the term.
- Make a Larger Down Payment – This option would make your parents feel like you are listening to them. You grew up with them harping you to save for a 20% down payment and there is a good reason why: it helps keep your monthly mortgage payment LOW.
- Get Rid of Your PMI – this option takes some time if your purchasing and your sellers don’t want to pay this off while negotiating. To be able to get rid of your PMI you must gain at least 20% equity in your home; once you achieve that you can request that your lender drop PMI.
- Pay for Points – when you pay for points you are paying for a lower interest rate. There may be more you pay for upfront in closing costs; however, over the term of your loan you aren’t acquiring unnecessary interest.
Even though summer is coming to a close and purchase season is slowing down. Freddie Mac reported that the average interest rate for a 30-year fixed rate dropped to another 3-year low at 3.49%. And as the unemployment rate remains historically low, this means that homebuyer demand is improving along with affordability.
August brought some significant good news, so take a deep breath and find solace in our current economy. Why? Fannie Mae is also predicting that the economy should continue to support the current refinance activity. How do we know that? August’s refinance volume was 150% higher than it was last year, which is in correlation to the increase in the demand for homes and affordability.
And if you are still thinking about refinancing know that Black Knight is here to tell us that roughly half of the homeowners across the United States are sitting on a combined total of 6.3 trillion dollars in tappable equity. We haven’t seen eligibility this high since the early 2000s.
Picture source: Google
This week mortgage interest rates have hit historical marks by reaching three-year lows. This significant marker of low rates comes just two months after The Federal Reserve announced rates have fallen and are not anticipated to rise again for the remainder of 2019. Low rates in conjunction with a surplus of home sales, the housing market is expected to continue to improve and show favorable conditions. Not only are the lower rates good news for potential homebuyers that are looking to enter into the market, but also continues to open opportunities to homeowners that are looking to refinance.