A mortgage is likely the single biggest investment you’ll make in your lifetime. Knowing more about how and when to refinance could therefore have a significant impact on your financial future. Here are a few reasons why you may want to consider refinancing now – as rates remain low by historical standards.
You Could Benefit from Historically Low Interest Rates
Interest rates fluctuate over time. The 30-year mortgage rate reached as high as 18.6% in 1981 and as low as 3.3% in 2012. Today’s rates are close to those from 2012, and in August 2020, actually fell even lower, to 3.19%.
This means that now may be the perfect time to consider refinancing your mortgage. A rate decrease of even 1% could save you tens of thousands of dollars over the life of your loan. You could benefit by either having lower monthly mortgage payments, or being able to pay off the balance of your loan faster with the same monthly payment.
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You Could Take Cash Out
If you’ve been paying down the principal portion of your mortgage, then you’ve been accumulating equity in your home. Now may be an opportune time to take advantage of that equity.
A cash-out refinance could give you access to cash at a lower cost and longer term than other options, like a personal loan (average personal loan rates fluctuate between 5.99%-28.99% depending on loan amount and credit qualification). You could fund any short or long-term goals you may have, such as improving your home with a renovation, paying down credit card or other debt, or covering college tuition.