Mortgage rates are dropping and have hit near historic lows. The first quarter of this year saw $335 billion in refinance originations, up from $125 billion the same time last year.
When you decide to refinance, you want the lowest rate. Whatever the rates are today might be even lower tomorrow, though.
What should you consider before going all-in on a refi?
Do you think it's the right time to refinance your mortgage? If that's the case, we're here to help. Stick with us while we look at the top five reasons to refinance.
What is refinancing?
When you refinance your mortgage, you pay off your existing loan with a new loan that you obtain at a lower interest rate, which lowers your payback amount. You can end up saving big in the long run.
What are the best reasons to refinance?
Do you plan to stay in your home for a while? Could extra cash help you pay off other debts quickly? Let's dive into the reasons to refinance your home.
1. You Can Pay Off Your Mortgage Quicker - With lower interest rates, you can shorten the term of your loan and pay it off faster. This will allow you to save thousands on interest over the life of the loan.
2. Better Interest Rate, Lower Payment - Now that the rate is lower than when you purchased your home, refinancing will lower your monthly mortgage payment. You will have more cash for savings or paying off other bills or taking that vacation.
3. Get Rid of Private Mortgage Insurance (PMI) - If your down payment was less than 20% when you bought the house, you may have had to pay for PMI. Now that you have paid down some of the loans and have some equity in your home, refinancing will help you remove the private mortgage insurance.
4. Get a Fixed Rate - If you had an adjustable-rate mortgage when you purchased the home, now might be a great time to refinance and get a fixed-rate mortgage at these low rates. You'll no longer have to worry about fluctuating interest rates.
5. Consolidate Debt - Do you have some other high-interest debt that you'd like to pay off? A cash-out refinance can help. You may have to refinance your mortgage for a higher amount to get the cash-out, but if you're paying off high-interest rate debt, it makes sense. You can use the money to pay off credit card debt, school loans, car loans, or even make home improvements.
Should I refinance my mortgage?
Now that you've learned the top reasons to refinance, are you ready to get started?
Rates are near historic lows, let Quicken Loans help you find ways to save money on your mortgage.
15-Year Fixed-Rate Mortgage:
The payment on a $200,000 15-year fixed-rate loan at 3.5% and 75% loan-to-value ratio (LTV) is $1,429.77 for the cost of 0.00 points due at closing. One point is equal to one percent of your loan amount. The annual percentage rate (APR) is 3.627%. One point is equal to one percent of your loan amount. Payment does not include taxes and insurance premiums. The actual payment amount will be greater. Rates shown valid on publication date of June 25, 2020. Some state and county maximum loan amount restrictions may apply.
30-Year Fixed-Rate Mortgage:
The payment on a $200,000 30-year fixed-rate loan at 4.125% and 75% loan-to-value ratio (LTV) is $969.30 for the cost of .25 points due at closing. One point is equal to one percent of your loan amount. The annual percentage rate (APR) is 4.219%. One point is equal to one percent of your loan amount. Payment does not include taxes and insurance premiums. The actual payment amount will be greater. Rates shown valid on publication date of June 25, 2020. Some state and county maximum loan amount restrictions may apply.
To qualify for these loan programs, you must be at least 18 years of age with a valid U.S. residency. Guidelines may vary for self-employed individuals. Formal approval will be subject to satisfactory verification of income, assets, credit, property condition and value. Additional restrictions/conditions may apply.
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Data is collected by LowerMyBills on behalf of Quicken Loans. LowerMyBills, Inc. is not acting as a lender or broker. The information provided by you to LowerMyBills is not an application for a mortgage loan, nor is it used to pre-qualify you with any lender. If you are contacted by a lender or broker advertising within our network, your quoted rate may be higher depending on your property location, credit score, loan-to-value ratio, debt-to-income ratio, and/or other factors. LowerMyBills does not offer its matching services in all states. This loan may not be available for all credit types, and not all service providers in the LowerMyBills network offer this or other products with interest-only options.