Tuesday, February 11, 2014

Time to Refinance?

During the winter months interest rates take an interesting turn - they go down! Very few homes are actually sold during these months because of the dismal weather conditions. Such has been the particular case for Atlanta this year because the weather has been dreadful for so long and I am confident there are very few people out braving the elements in order to look for a new home.

The other phenomenon that occurred recently is that interest rates jumped up dramatically around the end of 2013, drying up the refinance market completely. As mortgage interest rates climbed near 5% around the holidays, very few people found any benefit to refinancing. But as was expected, interest rates began singing a different tune at the beginning of January 2014.

Because interest rates have fallen substantially, I advise you to take a minute and evaluate whether it is time to refinance your mortgage again. The 30 year conventional mortgage is now down to 4.25% (recently it was up to 4.9%). There is even a possibility for a shorter term fixed rate as a ten year fixed rate mortgage is available at or below 3%.

A limited number of people actually look at adjustable rate mortgages, but I believe it would be highly beneficial for you to explore this option. Very few people, if any, will actually live in their home for 30 years so it makes more sense to get a mortgage that is relevant to your situation and the time period that you will be living in your house.

As an example, if you do not think you will be in your house for more than seven years, you can get a fixed rate mortgage for the first seven years which, if you decide to remain longer than you initially thought, would then convert to an adjustable rate mortgage which currently starts out at a very competitive 3% interest rate. If you’re fortunate enough to qualify under FHA or VA, the 30 year rates are incredibly inexpensive as well. Under these government guarantee programs the current rates are 3.75% on a conventional 13-year rate.

I am often asked by clients about jumbo loans and the current rates for loans greater than $417,000. You would be surprised to know that currently those rates are extremely competitive, and a jumbo loan is now being quoted at a 4.25% interest rate for a 30 year time period. Even more interesting to me is the 10/1 ARM quoted at 3.625%, or a beautiful 15 year fixed rate loan at 3.62%.

I thought as interest rates went up, we would never see great rates like these again - however, I was wrong and now is your time. If you are interested in refinancing your mortgage and would like to discuss it, please give us a call and we will put you in touch with a mortgage broker that you can trust.

As always, the foregoing includes my opinions, assumptions and forecasts. It is perfectly possible that I am wrong.

Best regards,
Joe Rollins