Don’t rush to refinance!

In April this year, mortgage rates rose to their highest level since November of 2018. In addition, some expect that Federal Reverse interest mortgage rates will continue to rise this coming year as inflation continues to go up. Many buyers are nervous about these changes and are either locking in lower rates or deferring house purchases until things settle down. But what about current homeowners? How might these changes affect them? Here are a few ways things could go.

Higher interest rates could affect your monthly payments
Owners with fixed-rate mortgages may not immediately feel the effects of rising interest rates right away unless their renewal period is coming up. However, owners with variable-rate mortgages may see changes to their monthly payments if they have passed the initial set period at the beginning of the loan. Then their monthly rate may be subject to the market interest changes. If you have a variable mortgage loan and are worried about rising rates, talk to one of our loan specialists to see available options. You may be able to refinance to a fixed loan or other mortgage rate option.

When should you refinance?
No one knows how long rates may continue to climb or how high they will go. One way you can take action during times of uncertainty like this is to look into your refinancing options. Typically refinancing occurs at set intervals, but in some cases, it may be worth it to refinance early. For example, if the rate of inflation is hurting your monthly budget, refinancing may help you save more money on your monthly payments.

Other refinance options
Scoring a lower mortgage rate or changing the terms of your mortgage loan are only a few reasons you may choose to refinance. There are lots of refinancing options available for homeowners to take advantage of, including:

• Cash-Out Refinance: If you need access to cash from your home equity to pay off debt or finance a renovation or another project, a cash-out refinance may be suitable. This type of refinancing allows you to access the equity in your home now and pay it back over the term of your mortgage loan.
• Refinance to get rid of FHA or PMI requirements: If you took out an FHA loan or loan with private mortgage insurance (PMI), you pay premiums each year against the money you borrowed. You may be eligible to refinance and restructure your loan to remove these requirements after meeting certain payment milestones.
• Refinance for a different mortgage term: Sometimes, it may be wise to adjust the length of your mortgage term. For example, maybe you want a shorter term to pay things off faster, or you need to lower your monthly payments by extending your mortgage term. Our loan specialists can walk you through all your options.

Refinancing isn’t a quick fix
Don’t make the mistake of thinking that refinancing your mortgage loan is a quick fix. While we do our best to make the process straightforward, there are a lot of variables to refinancing your mortgage loan. It’s best to thoroughly understand how the process works and how it will affect your financial goals and future. So even if you are concerned about rising rates, seek the advice of one of our loan specialists first before you make any big decisions.

*When it comes to refinancing your home loan, you can generally reduce your monthly payment amount. However, total finance charges may be higher over the life of your loan.