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Should You Refinance Your Mortgage While Rates Are Low?

| August 11, 2016
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Back in 2012 mortgage interest rates hit record lows, down in the mid 3’s for 30-year fixed rate loans. People were eagerly snapping up new loans to take advantage of the unprecedented rates. The Mortgage Bankers Association even reported that year that 80% of mortgage applications were for refinances.1

Interest Rates Are Historically Low

If you didn’t get in on the action back in 2012, either because you weren’t able to or simply failed to act, you now have a second chance. Once again, mortgage rates are historically low, but no one knows how long they will last. Time is of the essence because you never know when an opportunity like this will come again.

Looking all the way back to 1971, we can see that today’s rates truly are unique. In the 1970’s, rates slowly moved up from the mid 7’s to a peak of over 16% in 1981. Throughout the 1980’s, rates continued in the double digits until tapering back to the 1970’s levels during the 1990’s. Even while staying above 6%, rates were considered historically low during the early 2000’s until the housing bubble burst.2

You Can Save Money On Your Current Mortgage

Having access to interest rates below 4% is an opportunity not to be taken lightly. Even if you got a great rate only 8 years ago, you could still save hundreds of thousands of dollars right now by refinancing.

For example, let’s say you have a $500,000 30-year fixed-rate loan at 6% that you can refinance to 3.5%. The difference in the monthly payment alone is over $750. Over the entire life of the loan, the change of interest rate will save you over $270,000 in interest.

Closing Costs Must Be Considered

Refinancing is not free, however, and fees, or closing costs, need to be taken into account. Every loan is different and therefore incurs different fees. For our example, we will look at a range of possible closing costs. If the above loan were to cost $3,000 in fees, it would only take 4 months to make up the difference. If it cost $6,000, it would take 8 months, and with closing costs of $9,000, it would still pay itself off within a year.

Let’s say that instead your current loan has an interest rate of 4%. Does it still make sense to refinance if you can lower your rate to 3.5%? That depends on the closing costs. If it only costs you $3,000, you will make up the difference in less than 2 years, but if your fees are $9,000, if will take over 5 years!

Because specific rates and closing costs vary depending on the loan amount and other qualifying factors, it is important to discuss your own unique situation with an expert mortgage lender before deciding to refinance.

How We Can Help

Here at Residential Wholesale Mortgage, we work with Engaging Women in Wealth to take care of your mortgage loan needs. Engaging Women in Wealth works with a team of highly skilled professionals that can help you in every area of your financial life, including with your mortgage. They are under no obligation to work with anyone, but choose to work with those that they feel are the very best in their respective fields.

As we partner with Engaging Women in Wealth as mortgage specialists, we are able to offer you dozens and products in order to get you the lowest rate and best loan possible. We don’t charge any points on your loan, helping you to save money. Also, we leverage technology for ease and efficiency, creating a smooth and timely process. With our streamlined system and in-house underwriting, we are able to give you big bank rates with small bank service.

Now is the time to take advantage of such historically low rates. Call us today at 858.245.8738 or email [email protected] and we can set you up with a free, no-obligation consultation to see if refinancing makes sense for you. Now is the time to act; you never know when another opportunity like this will come around.

About Ryan Lischer

Ryan Lischer is a San Diego native with a passion for helping people achieve their financial goals. He and his team work diligently to ensure every client has the best possible experience and customer service with home financing. He is committed to communication and honesty and desires to ensure that his clients have the best experience and fulfill their financial goals.

Neither Summit Brokerage Services, Inc., nor Cetera Investment Advisers LLC, offer real estate or mortgage services.

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1 http://money.usnews.com/money/personal-finance/articles/2012/07/31/why-you-should-think-twice-before-refinancing

2 http://www.freddiemac.com/pmms/pmms30.htm

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