Mortgage Rates Are Dropping; Should I Refinance?

Is it a good time to refinance? 

Mortgage rates have been falling steadily over the last few months. In fact, during the last week of March this year, rates took their biggest one-week nosedive in more than a decade. 

However, the downward trend reversed at the beginning of April, when rates hit 4.29 percent, which is up from 4.17 percent just a week prior. If you’re thinking of refinancing, it’s best to move quickly to lock in the lowest possible rate.  

Reasons a refinance might be right for you: 

You’d like to lower your monthly payments

The current mortgage rates make this an excellent time to refinance with a lower interest rate. If your current interest rate is high, a refinance can save you hundreds of dollars on your monthly payments and thousands of dollars over the life of your loan.  

 You’d like to shorten the life of your loan

If you have a mortgage with a high interest rate, but you can easily meet these payments, consider refinancing to a shorter-term loan. You may be able to pay off your loan in half the time without changing your monthly payment much.  

 You’d like to convert your adjustable-rate mortgage (ARM) to a fixed-rate mortgage

The interest rate and payments will vary throughout the loan term of an ARM.  No one can predict what the future interest rates will be years from now.  It may be beneficial to you in the long-term to refinance to a fixed rate, which will give you peace of mind of a stable principal and interest payment and maybe save you money if the interest rates increase.

  Dade County Federal Credit Union’s current promotion pays many of a member’s closing costs.

With DCFCU current promotion paying up to $5,000 in member’s closing costs on your primary residence, the cost to refinance for you is quite low.  This may be the perfect time to refinance your primary home with DCFCU. Talk to one of our home loan experts today regarding the stipulations and eligibility requirements of the promotion and if refinancing now might be good for you. 

 When refinancing your mortgage is a bad idea:  

If you’re in debt and have excessive spending habits.

Some people refinance to have extra cash or pay off other debts such as installment loans (auto or personal), credit cards, lines of credit, etc. However, without a change in spending habits, there will be little change in debt as you may increase your debt after refinancing due to your spending habits.

If a refinance will greatly lengthen the loan’s terms.

If you’ve only got 10 years left on your mortgage and you want to refinance to stretch out those payments over 30 years, you should consider the additional interest you would be paying over the term. Any money you save may will be lost in the extra years of interest on your loan. 

You don’t plan on living in your home much longer.

If you plan on moving within the next few years, the money you save might not come close to the cost of a refinance. 

How much will it cost? 

Remember those fees and closing costs you paid when you first bought your house? Prepare to pay most of them again if you go to another lender. Broker fees will vary, but a typical refinance will cost anywhere between 3-6% of the loan’s principal. Before proceeding with your refinance, make sure you’ll actually be saving money. 

 With DCFCU’s current promotion, refinancing your primary residence may cost you very little in closing costs.  Talk to a mortgage expert to see if your refinance qualifies for the current promotion.

 DCFCU’s First Mortgages are available only on single family homes, PUD’s, townhouses, and villas (NO CONDOs) using Conventional or VA financing (NO FHA). 

If you’re ready to talk to a home loan expert about refinancing, stop by a DCFCU branch today.

Eddie Pradel