The last few years have been great for those who took advantage of the low mortgage rates the real estate market has been experiencing. If you did not take advantage of it, then you missed a really good deal.
The Fed has come in the recent times to increase rates bringing an end to the days of 3.55% financing. Since it is hard to identify the best times for home refinancing, we are going to look at the best times you can use .
When the interest rates are low
The current economic climate is right for a rise in interest rates. In the start of 2017, interest rates on 30-year mortgages climbed above 4% compared to 3.55% which was in 2016. By 2019, researchers predict that it could hit 6%.
These statistics show us that paying a percentage higher than the current rate in the market should be ideal for refinancing. This is the best time to refinance before rates move higher. When you get in when the rate is low, your monthly expenses will come down by hundreds of dollars.
When home values increase
Buyers can be pushed by rising interest rates. When the potential buyers jump into the real estate market, prices will rise, and it increases the value of homes. If you are planning to refinance, this is is the best time, and we are going to explain why.
- You will get great terms for a house that has a high appraised value and a mortgage balance that is low. This home is a low risk when the banks come into the picture, and they can easily recoup the loss in case you default.
- In case you have equity that is above 20% the value of your home, you can drop the insurance of the private mortgage you purchased using the original loan. PMI costs typically 1% of your loan on a yearly basis; when you have a $100,000 loan, you will be saving an additional $100.
- When the home values are high, you can go for a cash-out refinancing where you can access a new loan for part of the equity of the property, instead of going for alternative loan options.
Target refinancing toward the end of the month or at the end of the year
Mortgage loan officers normally work to reach their targets by the end of the month. Financial Samurai stated that loan officers normally put their foot on the gas during the last part of the month. When you refinance during the last week of the month, you are more likely to get better terms because the loan officer is working to meet the monthly targets.
Individuals in the field of financial services depend on bonuses at the end of the year, and this makes them desire to close more deals by the end of the year. The trick to use in this scenario is identifying an institution’s fiscal year cycle, because it may not be parallel to the calendar year. If you seek to refinance during the last quarter of the institution’s year, you are more likely to benefit because loan officers fight to shine for bonus evaluations.
We hope you will take advantage of the points highlighted above to make the most of your home refinancing plans.