It seems like just yesterday when you refinanced your mortgage.
Now you’re hearing that it’s wise to do it again. You already reset your mortgage term to 30 years for a better rate not that long ago, so why would you want to go through that again?
“Simply put,” said Mike Lavender, Director of SELCO Mortgage, “unless you’re deep into your mortgage term, there’s no better time than now to refinance.”
There are two major reasons why this is the case:
- Interest rates are still quite low, so you can expect even lower monthly payments than you’re already enjoying.
- In a white-hot real estate market (like in Oregon), your home’s value has likely skyrocketed, giving you more wiggle room to take advantage of your equity.
“With interest rates so low,” Lavender said, “there are a variety of ways that you can benefit from restructuring your loan—and save a lot of money in the process.”
Let’s explore a few scenarios for which re-refinancing your mortgage could make good financial sense in today’s market.
You could use some extra monthly savings
Today’s average interest rate on a 30-year fixed mortgage is nearly nearly 1.5 percentage points lower than at the start of 2019. In the mortgage world, that’s an astronomical difference. If you refinanced a $400,000, 30-year fixed mortgage in January 2019 at 4.50% and refinanced it today with another 30-year fixed loan at 3.00%, you would pay nearly $350 less per month. Sure, your term would go back to 30 years, but think of what you could do with that extra money each month. Going back a few more years (click on the "Current Mortgage Rates Data Since 1971" link), when rates weren’t on such a steady downward trajectory the way they have been lately, at today’s rates, you would still enjoy significant savings with another refinance.
You want to finally tackle that larger project
Been itching to do some home renovations? Or beef up your child’s education fund? A cash-out refinance just may be the ticket. Cash-out refinancing replaces your current mortgage with a larger one, with the difference coming in one lump-sum cash payment. At today’s bargain-basement interest rates, you’ll likely still enjoy lower monthly payments—or about the same, depending on how much you borrow. And don’t forget there’s cash in it for you.
You want to pay off your loan quicker
Your burgeoning home equity could open the door to refinancing to a shorter term with a much lower interest rate. Using the 4.50%/3.00% example from above, at 25 years, your monthly payment would be less and reduce the time left on your loan. For a 20-year mortgage, you would pay slightly more than $100 more per month while shaving off even more from your payoff timeline. Taking it all the way down to 15 years might mean a much higher monthly payment, but if your budget can handle it, the adjustment is worth a look. No matter which of these scenarios resembles your situation, you would pay far less interest over the life of your loan.
“Knocking a decade off your mortgage can save hundreds of thousands of dollars,” said Lavender. “So it really is true that taking advantage of the low rates and shortening your mortgage term can be life-changing.”
Decisions, decisions. A few years have gone by since you refinanced your mortgage. You’ve enjoyed the lower interest rate and subsequent smaller monthly payments. But today’s super-low interest rate environment just may be too enticing to pass up. Contact a SELCO Mortgage Loan Officer today to find out if refinancing again makes sense for you.