Real estate is a constantly shifting industry. There are certain times when it makes the most financial sense to buy, sell, rent and even refinance. Currently, the market dictates that it is the perfect time to refinance due to a number of factors, discussed below.
For anyone who is refinancing for the first time or may be confused by the process, researching online or speaking to a mortgage professional is a good place to start. Unlike ever before, refinancing doesn’t have to take months thanks to the emergence of digital platforms like the one we’re developing at my company cloudvirga. These technologies can help find order in mortgage chaos, automate many of the tasks it takes to complete the refinance process, ultimately driving final cost for the consumer down.
Here’s why to make the leap on a refi now:
1. Bond yields are at all time lows: If you’ve been considering refinancing, now is the time to act. Mortgage rates and bond yields have fallen, so if you got your mortgage more than 5 years ago and haven't refinanced since then, this is the time to do so. With excellent credit, you could cut you interest rate significantly, potentially saving thousands in the long run. It’s also a good idea to keep your original 30-year payoff date with your refinanced loan, and, if you can afford it, even refinance to a 15-year loan.
2. Fixed and adjustable rates are lower than ever: Now is the prime time for a refinance due to the very low adjustable and fixed mortgage rates. Notwithstanding the historic lows seen in 2012, this is a great time to refinance as rates could rise in the near future. Most financial advisors agree that the current rates can’t remain this low forever and with the Federal Reserve pushing to increase interest rates, the window of opportunity for a prime refinance is soon to fade.
3. Home appreciation has occurred over the past several years: Though home appreciation rates fluctuate throughout the country, on the whole, the real estate market is showing stronger-than-normal price appreciation. Median existing-home prices were up 6 percent over last year in September. What that means for potential refinancers, is that they will be able to borrow more money against the value of their homes, making now the right time to make a move.
4. Leverage increased home equity: As stated above, because of appreciating values, homeowners looking to refinance now can also expect an increase in the equity of their property. Since banks will be more willing to lend higher amounts at lower mortgage rates, refinancers may be able to pay a lower mortgage, or even take some cash out to start a business or reinvest.
The housing market’s volatile nature makes timing a crucial factor when deciding to refinance. A delay in action could translate to higher interest rates and cost thousands over time. Take advantage of low interest rates as they will likely rise in the future.