Whether you have plans to buy a new home or you are thinking about refinancing your mortgage in the near future, you may be wondering if now is the right time to move forward with your plans. There are numerous factors to consider when making a decision like this, and some of these are personal factors while others are related to the market conditions or the economy. With a closer look at what some of these factors are, you may be able to make an informed decision that is best for you.
One of the primary considerations when you are thinking about making a decision like this is what mortgage rates are. Currently, interest rates on home mortgages remain near historic lows, but there is a general upward trend. Interest rates are projected to slowly rise over the next couple of years. While they may still be lower than they were previously, the best time to apply for a mortgage may be sooner rather than later if you want to lock in a great rate. However, other factors must also be considered before you make a decision.
In many markets across the country, property values declined steeply during the most recent economic recession. This may have created favorable conditions for those who were looking for a great deal on a new home, but it also meant that some homeowners who were interested in refinancing lost equity they needed. Because property values in many markets have recovered or continue to recover, now may be a great time to refinance.
Your Personal Goals and Needs
Your home is one of your most significant assets, and it is imperative that you consider how refinancing or making a purchase will impact your budget. However, your house is also a place where you live, make memories and raise a family. It must be functional for your needs, and factors like proximity to your workplace, the quality of the local schools, proximity to healthcare services and retail centers, the size and layout of the home and many other factors all must be considered. If your current home does not meet your needs, it may be beneficial for you to relocate to a new home.
The Benefits of Refinancing
There are several factors that can impact how much equity you have in your home, and these include the amount of the down payment from your original purchase, the amount of principal you have paid down on your current mortgage, your current property value and your outstanding debt. Many homeowners who have owned their home for more than a couple of years may have a considerable amount of equity available to tap into with a refinance loan. You can speak with a mortgage broker or use a refinance calculator to determine how much equity may be accessible to you through refinancing. While some homeowners may not want to access their equity, others may benefit from using this equity to consolidate debts to a low interest rate loan, to make improvements to their home, to invest in money-making options and more. While there may be benefits associated with retaining equity in your home, there may also be benefits associated with using this equity in an advantageous way.
Your home is a significant asset. The mortgage payment may be one of the largest expenses you are responsible for each month, and it may also be an asset that holds a considerable amount of equity for you. While your home is an asset, it also must be functional for your needs. When you make a decision about whether to refinance or to purchase a new home at this time, it is important to carefully consider all aspects of this important decision. Because interest rates continue to remain relatively low and property values are on the rise, now may be a great time to move forward with plans that you may have put on hold over recent years.