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There really hasn’t been a better time to consider a home refinance than now! Mortgage interest rates are currently as low as 2.84% for a 30-year mortgage 1.95% for a 15-year mortgage. If you’re paying any percentage higher than those rates, you should consider refinancing your home. So the short answer to whether you should refinance your home is a resounding YES!
Take A Chance!
Coronavirus remains a health concern across the country and the world at large and here in the states, it’s kept mortgage rates at historic lows. If you’re locked into a higher mortgage rate, you should definitely consider a new mortgage sooner rather than later.
You may have many reasons to consider refinancing your current mortgage. Maybe you just want a lower mortgage payment or you want to pull out some equity for remodeling or to help with other life expenses. Here are a few reasons to consider a refi:
- You want smaller monthly payments. If you’re locked into an adjustable-rate mortgage, (ARM) you might want to refinance before the interest rates increase. Depending on the interest rate and your loan term, an increase in interest can mean more than $100 per month increase. Refinance your mortgage now before that rate changes.
- You have excellent credit but a life change has affected your finances. If you lost your job or have experienced a divorce that’s affected your income, refinance now before your credit suffers.
- You want to change the terms of your loan. Maybe you need a longer loan term so that you’ll have smaller monthly mortgage payments.
- You need to tap your home’s equity. If you’ve been in your home for any length of time, you may have built equity. Refinancing can allow you to access that equity and pay off other bills. Staying on top of your finances will help you keep your credit score healthy.
What You Should Know About Your Credit Score
FICO considers credit checks from mortgage lenders as a hard inquiry, one that takes a few points off your credit score, so multiple inquiries on your credit situation will temporarily affect your score. Rate shopping is not a bad thing but it can result in a slight ding to your credit score.
FICO says that it’s a small ding that will rebound quickly if you try to time credit inquiries to within 40-45 days. FICO treats all credit inquiries within that timeframe as one “credit pull,” and that minimizes the impact on your credit score.
Don’t let that small ding prevent you from looking for a better mortgage. If you want to improve your credit score, you might see a small dip, but the benefits of a better interest rate far outweigh that small initial hit you’ll take.
The Bottom Line
There’s no guarantee that mortgage interest rates will remain low. With that said, they’ve been at historic lows for a few years now, so you may have time to think over a re-fi, but why would you want to wait? If you’re planning on staying in your home for a few more years, you could be saving major dollars every month by refinancing now.
Don’t wait! Start saving money on your mortgage today when you refinance for a lower interest rate!