5 Signs That It’s Time to Refinance Your Mortgage

Have you been giving some thought to how you might be able to save money if you refinanced your mortgage? How do you decide if it’s really worth it? Here are 5 signs that you might want to sit down with a banker and explore refinancing seriously. refinance your mortgage

  1. Interest rates are moving. If your mortgage has an interest rate that is several years old, it might be time to refinance. Mortgage interest rates fluctuate. If the Federal Reserve Bank raises interest rates, mortgage rates will likely follow.
  1. You have substantial equity in your home. Equity in your home can be accumulated by your monthly payments or by the value of your home increasing. Either way, it’s good news. You can ditch PMI (private mortgage insurance) when your home reaches its 80% loan-to-value ratio. A lower loan amount likely translates to a lower interest rate, saving you money on your payments.
  1. There is a positive change to your credit score. Bank loans often involve a cargo-shipload of paperwork, including your credit history. You may not have realized it at the time, but the interest rate on your conventional loan was based on your credit score at the time of application. A current, higher score usually translates to a better interest rate.
  1. Your income increases. The promotion comes through. A major client signs the contract. Your book was sold to a publisher. These are all good things that relate to more money in your pocket. Take that to the bank, literally. Secure a better interest rate based on your increased ability to repay the bank loan. Or you could refinance a 30-year fixed-rate loan to a 15-year one and increase your equity.
  1. Your relationship status has changed. Breaking up is hard to do. Throw real estate into the mix and things get complicated. Division of the assets usually includes the residence and that means each party’s share of said assets. Refinancing the home is one way of “buying out” the other party involved.

Know Your Options

Once you’ve decided to explore financing, think about the kind of mortgage you want. You’ll have a lot of choices. Below are some terms you should know in order to make a choice that’s right for you:

Jumbo Loans: Mortgage amounts greater than $453,100 are in most cases considered jumbo loans. (This limit is higher in certain areas.) These types of loans mean more money is doled out by the bank and consequently they’re riskier for the lender. Banks mitigate their risk by charging higher interest rates to borrowers.

Conforming Loans: Typically, a loan amount of $453,100 or less is called a “conforming loan” because it adheres to guidelines set by Fannie Mae and Freddie Mac, buyers of secondary mortgages. Banks will typically sell qualifying loans to these government-sponsored entities to free up cash.

Conventional Loans: Any mortgage issued by a lender, but not backed by the federal government. Both conforming and jumbo loans fall into this category, but only conforming loans sell on the secondary market.

Let’s talk about how refinancing can help you get a better rate, or move you closer to your financial goals.

What the 2018 housing market will bring

What the 2018 housing market will bring ~

Because the tax bill was passed after the real estate entities put out their 2018 forecasts, their projections below don’t include what impact, if any, several provisions in the bill — such as the caps on the mortgage interest and property tax deductions — will have on the market. Some experts are anticipating prices won’t rise nearly as fast because of the new law. Others say it will help first-time home buyers enter the market.

Here is a brief roundup of their forecasts and what they expect the major trends to be in the coming year:

National Association of Realtors  predicts home prices will rise about 5 percent in 2018. “Low supply is pushing prices higher. The Good news is Home prices are predicted to continue to improve.

The biggest impediment to sales is the shortage of supply in relation to overall demand. The lagging pace of new-home construction in recent years is further creating a logjam in housing turnover. “The lack of inventory has pushed up home prices by 48 percent from the low point in 2011, while wage growth over the same period has been only 15 percent.

The National Association of Realtors anticipate that mortgage rates will gradually climb with the 30-year fixed-rate average reaching 4.5 percent by the end of 2018.

Entry-level homes will continue to see price gains because of the large number of buyers and limited number of homes for sale. With few houses on the market, homes will sell faster than ever.

Home prices will continue to rise but at a more modest pace. Zillow company surveyed 100 economists and housing experts who projected prices to increase 4.1 percent in 2018.

Mortgage Bankers Association predicts mortgage rates will slightly increase in the coming year “As far as rates are concerned, 10-year Treasury yields are forecast to increase in 2018, The MBA estimate that mortgage rates will reach the 5.0 percent level by the middle of 2018, but rising only slightly beyond that to average 5.3 percent in 2020.”

Mortgage applications will be fueled by purchases rather than refinances in the coming years.

“Our forecast for 2018 is that we will see continued growth in the Housing Market.

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Thank you for reading!

 

Bob Idakaar GRI

973-713-2377

WWW.BOBSHOMES.NET

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