Refinancing: A Key to Your Financial Future During the COVID-19 Crisis?
April 14, 2020
If you’ve followed the headlines in the last month or so, you probably heard that the Fed cut rates as an effort to stabilize the economy going into the COVID-19 Crisis. By now you probably also realize that the announcement did not mean that your new neighbor got their mortgage at a 0% interest rate.
Even though you won’t find that no interest 30-year mortgage, now is still a great time to find financing opportunities are to buy or refinance with low interest rates. These low rates can give you more buying power if purchasing or can help you save hundreds on your monthly payment or cash out some equity by refinancing.
Tapping into Equity
When you purchased your home, you may have been more focused on the how long you could live with a lime green bathroom rather than thinking about how your new investment could be your secret weapon (lime green bathroom and all) in times of need. While rates are still low and home values remain steady, refinancing to pull out some of the equity in your home may be a good option and alternative to home equity lines of credit or personal loans to access funds as COVID-19 continues to run its course.
Rate isn’t Everything
Since there are no “one size fit all” rates for everyone across the board (rates change day-to-day and are based on borrower qualifications, program and other factors), rate isn’t the only thing you should be thinking about if you’re trying to save money on a mortgage. While many typically think lowering their rate is the only reason to refinance, there are several other benefits to checking up on your mortgage. In addition to lowering your current interest rate, you may be able to save money or meet your needs by changing the term, type of program or remove monthly Mortgage Insurance on your loan.
Considerations for Refinancing
Knowing your personal and financial long and short-term goals is important when deciding whether to refinance and what you hope to accomplish. Some questions to think about to guide your path might be:
- Are you interested in shortening your term and lowering your rate to pay your home off faster?
- Does your house have equity that could be used to do projects, pay down debt or help you financially through the current pandemic?
- If you saved money every month on your mortgage, would you be able to achieve other personal or financial goals with the savings?
There are many things to think about when considering a refinance, but your Loan Originator can help you by going over all available options for your current situation and breaking down the short and long-term benefits of each option.
Considering a refinance or buying a home? Get started by connecting with one of our Loan Originators today.