Reasons To Refinance When Rates Are Moving Up

Reasons to​ Refinance When Rates Are Moving Up
Interest rates have enjoyed record lows during the last few years allowing many people to​ refinance and​ enjoy lower mortgage payments .​
Now, interest rates are moving in​ the other direction​ .​
The average 30 year fixed rate, according to​ mortgage giant, Freddie Mac, was 6.31% last week .​
Still, during this​ same period, refinancing accounted for​ 43.6% of​ mortgage applications.
Why would anyone refinance when rates are going up? With cash-out refinancing, you​ refinance your​ mortgage for​ more than you​ owe and​ keep the difference .​
Freddie Mac is​ predicting, by year end, homeowners will convert $204 billion​ of​ home equity into cash, up from $142 billion​ in​ 2018.
1 .​
Pay off home equity credit lines.
The average rate for​ a​ HELOC (Home Equity Line of​ Credit) rose to​ 6.97% last week, up from 5.09% from a​ year ago .​
Most HELOC loans have variable rates that go up when the Federal Reserve raises short term interest rates .​
Recently, the Federal Reserve announced its12th consecutive rate increase and​ they sent out a​ strong message they will continue the short term interest rate increase .​
Using a​ refinance to​ pay off a​ HELOC not only will lower your​ existing HELOC interest rate, but you​ can stop worrying about the Fed …for​ your​ second mortgage at​ least.
2 .​
Consolidate your​ mortgages.
Unless you​ put 20% or​ more down on​ your​ home, there is​ a​ good chance you​ did a​ combination​ (or piggyback second mortgage) loan to​ avoid PMI (Private Mortgage Insurance) which is​ required on​ loans with less than a​ 20% down payment .​
Second mortgages typically carry higher interest rates and​ a​ cash-out refinance may allow you​ to​ consolidate these loans into one lower monthly payment.
3 .​
Secure a​ Fixed Rate Mortgage.
Rates for​ adjustable mortgages, which are sensitive to​ Fed moves, have been rising faster than fixed rate mortgages .​
Borrowers with loans close to​ a​ rate adjustment are facing an​ increase in​ monthly payments and​ the possibility of​ even higher rates down the road .​
Many borrowers who plan to​ stay in​ their homes are fending off the higher rates and​ potential future increases by refinancing into fixed rate mortgages.
4 .​
Improve your​ Home.
Home Equity Lines of​ Credit and​ fixed rate second mortgage rates have been rising .​
a​ cash-out refinance can prove to​ be a​ cheaper way to​ finance your​ home improvement, especially as​ the cost of​ the improvement increases .​
Properties refinanced during the 3rd quarter of​ 2018(?) saw 23% appreciation​ since the original loan was taken out .​
Improvements made after the refinance may lead to​ even greater increases.
While many people will no longer be interested in​ refinancing for​ a​ lower rate, there are many reasons to​ consider refinancing even as​ interest rates increase .​
if​ you​ have an​ existing second mortgage, need cash to​ consolidate credit card debt, or​ want to​ do some home improvements, refinancing your​ current home mortgage may be the best financial move for​ you​ .​
for​ more information​ regarding current rates, you​ can visit our website at​
Reasons To Refinance When Rates Are Moving Up Reasons To Refinance When Rates Are Moving Up Reviewed by Henda Yesti on April 17, 2018 Rating: 5

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