Mortgage rates have dropped again to lower rates than we have seen in months! They are about where they were last fall. So the question is what happens if you have an adjustable rate mortgage? Is it time to refinance?
The index that your adjustable rate mortgage is based on is probably at the lowest rate ever. Most five and seven year adjustable rate mortgages are adjusting lower than where they started. Current interest rates on adjustable rate mortgages are about 3-4%. So does it make sense to refinance that mortgage? It does if you are planning on being in the home for awhile. Many people did adjustable rate mortgages with the plan of moving in 3-5 years, now they are thinking they will stay longer due to home values.
The best answer to give you is decide how long you will be in the home. Current 30 year fixed rates mortgages are about 4.5% depending on credit scores and programs. If you are only going to be in the home for another year or two, it may make more sense to keep your adjustable rate mortgage. If you think you will be there longer, then look into refinancing.
If you decide you want to refinance, you may want to look at a slightly higher interest rate and use a lender credit to pay some of your closing costs. By doing that, you won't have to increase your mortgage amount or come up with the cash to pay for the closing costs. Talk to a loan officer and make an informed decision based on the rates and costs of a refinance. You need to make sure it pays off to do the refinance and if you are planning on being in the house for at least a couple more years, it should make sense financially!
Leslie Vanderwerf, NMLS ID#335509, Advisors Mortgage - Email – Website
