Is The Time Right Again for a Refinance?

Now that the rock-bottom mortgage interest rates from the Great Recession are likely gone for good, refinance requests have tapered off dramatically. Is there still room in the market for refinance loans?

Absolutely. The latest Freddie Mac refinance report predicted that although refinance activity will likely continue to decline over the next few years, they will still make up a substantial percentage of all mortgage activity. “We estimate that refinances will make up approximately two -thirds of single – family originations this year and about one-half in 2014, compared to about 70 to 75 percent in 2012,” said the report from the office of the Chief Economist. That’s still way more than a majority of mortgage loans going to refinancers.

So is now the right time for you to refinance your home loan? There are three common reasons people today might still want to switch out the old mortgage. First, many homeowners took out adjustable rate mortgages during the housing boom. These loans can be risky when interest rates jump higher. These buyers often refinance to get into a fixed rate mortgage instead. In fact, Freddie Mac found that 95 percent of all refinance borrowers during the first quarter of 2013 chose fixed rate loans.

The second great reason is to take advantage of low rates. And yes they are still low! Today’s average is well below the historical average of the past 40 years. If you haven’t refinanced during the past five years, you could save yourself a great deal on interest over the course of your loan by refinancing into a lower rate today.

And of course with home prices rising so fast, many homeowners are feeling house-rich again and getting cash-out refis. Freddie Mac’s report found that Americans pulled $8.1 billion out of their home equity in the first quarter, which is down from the 2012 fourth quarter’s $8.2 billion, but still accounts for a lot of refinance money. A cash-out refinance could give you the funds you need to finish that home improvement project or help pay for your child’s college tuition this fall.

Just because rates are emerging from their black hole of the past several years doesn’t mean you can’t get a great refinance deal. Just take a look at the numbers and see if its right for you now.




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