Are you ready to buy a new home? If so, congratulations! We understand that the current interest rates might make you feel a bit wary, and if that’s the case, don’t worry. The best thing you can do is to buy a new home now before housing prices increase any further! Once you have your dream home, you can always refinance your mortgage when rates go down. Refinancing allows you to revise your home’s original loan (or get a new one) once the mortgage rates decrease. You’ll still have one monthly loan payment at the newly refinanced rate! Let’s take a look at the top 3 reasons to consider refinancing.
1. Lock in a Lower Interest Rate
Although interest rates are high now, they will fluctuate. According to Trading Economics, between 1971-2022 interest rates averaged 5.42%, reaching an all-time high of 20% in March 1980 and a record low of 0.25% in December 2008. As of January 2023, the current average 30-year fixed mortgage is 6.47%. So whether you’re in a 15-year or 30-year mortgage, interest rates will fluctuate quite a bit over time. That means there will be opportunities to refinance and lock in a lower payment!
2. Reduce Your Loan Term
One of the benefits of owning your home vs. renting it is that the sooner you pay it off, the sooner you can become debt free and start keeping that monthly payment for yourself! One of the strategies to consider is that if you’re able to reduce your monthly payments, that may allow you to pay more toward the principal of your loan each month, accelerating your progress toward paying off your home! If you currently have a 30-year loan, then refinancing may allow you to reduce your terms to a 15-year loan.
3. Switch Your Loan Type
If you’re currently utilizing an adjustable-rate mortgage (ARM), those usually offer a lower interest rate at the beginning of the loan, but then the rates fluctuate to a much higher rate. Refinancing offers an opportunity to shift to a fixed 15- or 30-year fixed-rate mortgage to eliminate the rate fluctuation of an ARM loan.
Ready to Buy a New Home?
If you’re ready to buy a new home, we recommend contacting one of our preferred lenders – U.S. Bank or Safe Credit Union – to get pre-qualified! Partnering with one of our preferred lenders means we can work with you on our interest-rate buydowns, allowing you to get an even lower rate on your dream home! As we’ve discussed here, you can always refinance later. If you feel ready, contact our preferred lenders today to see what you’re approved for!
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