The past few weeks have brought a whirlwind of change to just about every aspect of daily life—business, work, play, and everything in between. In this time of upheaval, you might’ve noticed that mortgage interest rates have dropped… and dropped and dropped. And if you own a home, you may be considering whether now is a good time to refinance.
So… Is It a Good Time to Refinance?
A “good” or “bad” time to refinance really can’t be wrapped up in a blanket statement that applies to all homeowners. Instead, there are some factors that should be individually considered before you make a decision.
Here’s what to ask yourself if you’re considering refinancing.
Why do I want to refinance?
Understanding your reasons for refinancing can help you determine whether it’s a good idea. If you’re interested in reducing your payments, and your interest rate is higher than what’s currently being offered, it might be worth looking into.
You may also be curious as to whether you can shorten the life of your loan, say from a 30-year to a 15- or 20-year loan. You might also be considering a cash-out refinance, which would enable you to take the equity on your home and put it towards something else, like an investment property, business venture, or education.
How much will it cost me?
What many owners don’t realize is that refinancing comes with closing costs, just like the initial home purchase. Typically, total closing costs average about 2% – 4% of the balance of the loan—which can amount to several thousands of dollars.
Some lenders offer no-cost refinancing options… but typically, they expect to make up these costs elsewhere, like with a slightly higher interest rate.
How long will I wait?
Because current market conditions are so favorable (read: interest rates are low), many homeowners have been refinancing, so the process has slowed down a bit. In fact, over two times as many homeowners have refinanced than in previous years.
So.. is it worth it?
Unfortunately, we can’t answer this for you. It depends largely on your personal situation, including your current rates, the duration of your loan, the amount you currently owe, and whether you plan to move in the next handful of years. In short, you might need to do some thinking about your plans—and maybe break out a calculator, too.
Now Is a Good Time to Refinance… Maybe!
So the bottom line is that now could potentially be a good time to refinance, thanks to those low interest rates, but ultimately, as with many aspects of real estate, it depends on your personal situation.
Not sure whether refinancing is the right move for you or have other questions about buying or selling in Raleigh? Don’t hesitate to reach out to us. At Linda Craft & Team, we’re eager to put our combined 350+ years of experience to work for you.