Tags: mortgage | refinance | home loan | Motley Fool

Motley Fool: 3 Signs You Need to Refinance Your Mortgage

Image: Motley Fool: 3 Signs You Need to Refinance Your Mortgage

By    |   Monday, 14 Mar 2016 12:44 PM


Don’t get caught up in preparing your income tax return and let other aspects of your financial and economic life fall by the wayside.

For example, have you checked mortgage rates recently? Should you refinance your home loan?

Motley Fool’s Matthew Frankel offers 3 guidelines to decide:

Your interest rate is too high, or isn't fixed
  • Mortgage buyer Freddie Mac said Thursday the average rate on a 30-year, fixed-rate mortgage edged up to 3.68 percent from 3.64 percent last week.
  • The benchmark rate remains below the 3.86 percent level it marked a year ago. The average rate on 15-year fixed-rate mortgages increased to 2.96 percent from 2.94 percent last week. Rates may be even lower for those with excellent credit scores.
  • "If you haven't explored the option of refinancing, you might be surprised at just how much you could save – even if you don't think your current interest rate is that bad," Frankel explains. "Be aware, however, that refinancing is only worth it if you'll be in the house long enough for the savings to justify the costs. Refinancing mortgages have closing costs, just like purchasing mortgages."
You need cash or you have a lot of credit card debt
  • If you need to make a big purchase or have a lot of high-interest debt, doing a "cash out" refinancing is almost always a better option than buying something with a credit card, or consolidating your debt with an unsecured personal loan or borrowing from your retirement savings.
  • "Basically, a cash out refinancing involves obtaining a loan for more than your current mortgage balance and receiving the difference in cash. You can generally do this as long as the new loan represents 80% of your home's value or less," Frankel explains.

You've had an FHA loan for several years, and you now have equity in your home
  • "FHA loans are great products for those who need them, as they allow borrowers with lower credit scores to buy homes without a large down payment," Frankel explains. "Unfortunately, this comes at a price. FHA loans have steep mortgage insurance premiums, and generally cannot be cancelled for the life of the loan, no matter how much you pay down."

To be sure, average long-term U.S. mortgage rates rose last week for only the second time this year. It was the second straight weekly increase for long-term loan rates, which had declined since the start of the year amid global economic anxiety and market turbulence, the AP reported.

Rates still remain at historically low levels at the start of the spring home buying season.

Though markets have stabilized and some economic worry has abated, most experts don't expect the Federal Reserve to raise the short-term interest rate it controls at its policy meeting next week. In December, the Fed increased the rate from a record low near zero for the first time in seven years.

(Newsmax wire services contributed to this report).

Related Stories:

© 2017 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
Don't get caught up in preparing your income tax return and let other aspects of your financial and economic life fall by the wayside. For example, have you checked mortgage rates recently? Should you refinance your home loan?
mortgage, refinance, home loan, Motley Fool
508
2016-44-14
Monday, 14 Mar 2016 12:44 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved