Housing Bubble
Knowing When to Refinance
LEMOYNE, Pa., /PRNewswire/ -- This year, 30-year fixed mortgage rates have been their lowest since Freddie Mac began tracking in 1971. According to the Pennsylvania Builders Association (PBA), for those with high interest mortgages, there has never been a better time to refinance.
But how do homeowners know when to refinance? Is it better to wait to see if interest rates continue to decline or refinance immediately to avoid the risk of rates going back up?
"If the rates are significantly lower than the interest on your current mortgage, exact timing is not as big a factor as other things going on in your life," said Charles Farrell, president of the PBA. "Most homeowners refinance to lower monthly mortgage payments, to shorten loan terms, to pay off credit card debt or for other investments that give a better return than the mortgage. If the interest is cost deductible, it's a good time to refinance."
Whatever the reason for refinancing, the homeowner still needs to do some math. Refinancing -- even "no cost" refinancing -- comes with a fee. Refinancing homeowners need to stay put long enough for the new mortgage to pay off in terms of covering the up front cost of the refinance.
"If you're thinking of moving in the next year or two, refinancing might not be your best option," said Farrell. "But if you're going to live in your house for a few years, it's worth it to do some number crunching. Talk with a mortgage banker or check online for sites that help calculate mortgage fees to find out how much you could save."
The PBA is the statewide association representing the residential construction industry. The PBA has 41 local association affiliates throughout the state. The mission of the PBA is to promote programs and services to enhance affordable housing opportunities for all Pennsylvanians.
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