It’s true. Mortgage rates have slowly gone up since the rates dropped July of the previous year. Following the historic Brexitwhich pushed mortgage rates to the record-low 3-percent range, the only Fed hike in December, coupled with results from the latest presidential elections have contributed to the slow hike in home loan interests. But does that affect your chances of securing homeownership?
Compared to other times in history, the current 4 percent mark in mortgage interest rates still ranks one of the lowest ever recorded. In the early 1980s, mortgage rates went up as high as 18 percent for a conventional 30-year fixed-rate mortgage product. Imagine paying that much on top of the costs of closing?
If you weren’t able to refinance last year because of unfortunate timing or the need never occurred at that time, locking in right now makes sense if you want to take advantage of current rates before it pushes forward.
Consolidate your debt
One of the most common reasons why borrowers refinance is to restructure their finances by properly managing debt. A proven and effective way to do this is to consolidate these debts into one. If your finances have gone haywire after the holidays and built up charges on top of your already large debt, refinancing through a cash-out refinance program could help you solve that dilemma.
A cash-out refinance allows you to tap into your home’s equity and use the proceeds for whatever purpose you see fit. This money could be more than enough to help you get back your financial shape and build good credit.
Shorten loan term
If you currently carry a mortgage payable for 30 years, you can opt to shorten your loan term in exchange for a higher interest rate. Although you may be paying more every month, you will also significantly cut down your paying time and therefore save money that goes to interest.
Use money from your home’s equity
As has been mentioned, the proceeds of a cash-out refinance is significantly helpful in helping you manage your debt. However, this is not the only case wherein you can take advantage of your cash-out. Whether you need to pay for home renovations, a medical emergency, or fund your children’s education, your home equity is a reliable source for that needed funding, as long as you have built up significant equity and you’re not underwater on your mortgage.
2017 could be the restart year you need. Remember, however, that refinancing is a significant decision that requires careful evaluation and thorough decision making. Make sure you know the risks involved and you have the resources needed to back you up should you engage in the process.
And when it comes to getting help, choose the right people.