If you’re looking to refinance your home, it’s important to consider the mortgage rates. As rates increase, the likelihood of people opting for a home refi will be considerably less.
Home Refinancing Affordability
You have to look at what your current mortgage rate is to determine if it’s worth it for you to refinance. Much of it will depend on whether you’re on a fixed or ARM rate. Fixed rates are likely to go up, which means that unless you have a higher rate than what’s currently being offered, it’s not in your best interest to explore a home refi.
However, if you are on an adjustable rate, you could explore mortgage rates before they continue to rise much further. You can lock into a fixed rate that is lower than what the ARM is. After all, you don’t want to get into a situation where your mortgage payment keeps climbing every month because of the adjustable rate that is in place.
Home Refinancing Fees
You have to look at the rates to see if it’s going to be worth it for you to refinance. The way to determine this is to look at the various fees involved with conducting a home refinancing.
If you’re not going to reduce the rate by at least 100 basis points, the costs may be too high for you to save any money. There may be:
- Origination fees for the loan
- Home appraisal fee
- Inspection fees
Some banks may choose to waive application fees, though this could be an added expense as well.
If you’re not getting at least 100 basis points, then you may want to stay with your existing mortgage rate. Otherwise, you could end up spending several hundred (or thousand) dollars upfront to drop your mortgage payment by only a small amount of money.
What to Expect for Home Refinancing in 2018
Interest rates are expected to increase steadily over the course of the year. As a result, there are going to be fewer and fewer people choosing to refinance because the mortgage they currently hold has a lower interest rate.
The only way a home refinancing is likely to benefit you is if you want to get out from an FHA loan and into a conventional mortgage so you can eliminate mortgage insurance.
By exploring the rates and how they will affect refinancing your home will make it easier for you to determine what your options are. You may want to speak to a lender to decide if refinancing will benefit you based on your current rate and the type of mortgage that you hold.
