The Fed has cut interest rates for the first time in two years. NOW could be the right time for you to refinance.
When deciding if refinancing is right for you, the math isn’t as simple as comparing the interest rate you locked in when you were approved for your mortgage versus the rate you can qualify for now. You’ll want to consider these factors:
- The after-tax monthly savings (new payment compared to old payment, after any tax-favored treatment).
- The amount of time that you intend to be in the home.
- The cost of obtaining the new mortgage.
Why Refinance?
For many, it’s a good idea to refinance your loan if you can lower your interest rate and plan to stay in your home long enough to recoup the refinance closing costs.
Key Reasons to Consider Refinancing:
Lower your interest rate
If interest rates have dropped since you first obtained your mortgage, a rate-and-term refinance can provide you with a lower rate. Ideally, that rate should be one-half to three-quarters of a percentage point lower than your current rate.
You might also qualify for a better interest rate if your credit score has improved since taking out your current loan.Pay for large expenses
You can do a cash-out refinance to tap your home’s equity for cash. These funds can be used for any purpose, such as:- Lowering or paying off high-interest debt
- Renovating your home
- Paying college tuition
- Investing in property
Eliminate private mortgage insurance (PMI)
If your home’s value has increased, refinancing your conventional loan could get you out of paying private mortgage insurance (PMI) sooner than what is laid out in your repayment schedule.Change your loan structure or term
If you’re not far into repaying a 30-year mortgage and want to pay it off sooner, you could refinance to a shorter loan term, such as 15 years. This will save you money on interest, as well.Likewise, if you have an adjustable-rate mortgage about to convert to the variable-rate period, you could refinance to a fixed-rate loan to guarantee predictable monthly payments.
There are several kinds of refinance options, each with unique pros and cons. To decide if the time is right, reach out for a complimentary cost-benefit analysis.
Intercoastal Mortgage, LLC (NMLS ID# 56323) is a leading mortgage lender headquartered in Fairfax, VA dedicated to providing exceptional service and personalized solutions to help individuals and families achieve their homeownership goals. ICM provides competitive pricing and cutting-edge residential mortgage loan programs, offering a broad menu of loan options including conventional, non-conventional, VA, FHA, USDA, jumbo, super-jumbo, construction, renovation, and bridge loans. ICM, LLC has offices in six states: Virginia, West Virginia, Maryland, North and South Carolina, and Florida, with loan officers in over twenty cities, plus the District of Columbia. For more information, please visit www.intercoastalmortgage.com. For licensing information go to: nmlsconsumeraction.org. Equal Housing Opportunity lender.
