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Is It Too Late to Refinance?

Right now, interest rates are at historic lows, and no one knows just how long they will stay this low or even if they will go lower. As the economy continues to start bouncing back from the pandemic, Wall Street seems to fear that inflation will rise and that will cause the Fed to raise rates.

Of course, all of that is speculation because no one can say for certain what will happen with rates in the future. As a result, many homeowners who have considered refinancing their mortgage are wondering if it’s too late. At Raleigh Cary Realty, we say, “It depends.”

Why we say that it depends is because not every homeowner will have the same reason for refinancing. If you’re looking purely to secure a lower interest rate, then you might want to consider it now. Ideally, if you can lower your rate by at least 2%, you will be doing great.

Another reason to consider it is if you are currently in an adjustable-rate mortgage, and you want to switch to a fixed-rate one. This makes sense if you are planning on staying in your home for a long time. Conversely, going from a fixed-rate to an ARM is actually a better strategy if you only plan on staying for a short time. If that’s the case, consider going that route soon.

Probably the best reason to refinance is if you want to shorten the mortgage loan’s term rate. Depending on the previous interest rate, homeowners who refinance to a lower rate, can reduce a 30-year fixed-rate mortgage to a 15-year with only a slight change in monthly payments. We do advise you work with the lender to determine the new payments before you decide.

Bear in mind that there are costs involved in refinancing. It usually costs between 3-6% of the principal, so factor that into the decision-making process because it will take time to recoup that cost. Even $4,000 on a $100,000 refinanced loan that reduced the rate by 1% would take approximately four years to make up the difference.

So, that’s why it depends. Every homeowner’s situation is different. For more helpful advice, ask the experts at Raleigh Cary Realty. We’re the hometown realtor you can trust.

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Our agents write often to give you the latest insights on owning a home or property in the Triangle area.