3 Reasons Why You Should Refinance Your Home Loan Now
Refinancing your home loan can be quite a sticky subject. This is due to the possible repercussions of deciding without proper consideration of several factors. Since the real estate bubble burst in 2008, the government has come up with several versions of a program that will help homeowners with their mortgages.
In recent times more and more people are considering refinancing their homes. Some experts say now is a good time to consider this as a viable option. There might be some truth in this given that your home actually might have a higher value now. Of course, considering where you live and how much you bought your house for, the value of your property may have improved. Whereas you may not have had equity before, you might find yourself in a more favorable position given that the recent times have been fairing better.
If the worth of your house has already gone up versus what you owe in mortgage, then you can consider refinancing your home. On the other hand, if the worth of your home is less than what you owe, you might encounter some problems with the lender. Given this, you should check first if you are in a good position to refinance.
All else being good, here are three reasons why refinancing your home now is a smart choice:
Interest rates are low
According to the Federal Reserve, interest rates are likely to stay low for some time. This is the opportune time to consider refinancing your home. Some brokerages say that this is as good a time as any given the favorable interest rates, which they optimistically foresee could go as low as 1 percent. For example: A $300,000 loan with a 5.1 percent interest rate refinances to a 3.64 percent interest rate will have a savings of an estimated $400 a month. This is considerable savings for homeowners!
Mortgage insurance has decreased
Last January 2015, the Federal Housing Administration (FHA) announced that they will lower their annual insurance steps to protect consumers by reducing risks in the mortgage market. This move reduced the mortgage insurance premium rate from 1.35 to 0.85 percent for FHA-backed loans. This was seen to result in more savings for new homebuyers and people who will choose to refinance their homes. Future borrowers who qualify for FHA’s program will enjoy benefits of more affordable FHA loans at a more affordable cost.
HARP has been extended
The Home Affordable Finance Program 2.0 or HARP 2.0 aims to help more homeowners whose mortgages’ worth have become greater than the value of their very homes. It allows them to refinance their homes at a lower rate. This is part of the government’s effort to create more value for homeowners by saving those who are near underwater with their mortgages. The program offers a lot of good deals that enables homeowners to save more by refinancing their homes. The program has been extended until 2016, so if you are considering refinancing, now might be as good a time as any.