Refinance before rates increase

If you’ve been considering refinancing your home mortgage, you may want to act now instead of later. According to a recent article by Jonathan Clements for the Wall Street Journal, several signs point to a coming increase in interest rates.

Rates reached a 60-year low in late 2012, but still remain at a desirable level for many mortgage borrowers who want to refinance. The recent increase in home values also means you may have more equity–one of many factors that could make lenders more likely to approve your refi.

You don’t have to refinance your original 30-year mortgage with another 30-year mortgage; it may not even be the best option. Depending upon the interest rates of the original mortgage and the refi, you may want to go with a 15-year mortgage, or a hybrid ARM (Adjustable Rate Mortgage), which is fixed for the first five years and adjustable for the remainder of the term.

Clements also offers sage advice on the subject of retirement. In 1989, only 21% of senior homeowners still had a mortgage; as of 2010, that has increased to nearly 40%. With a fixed income during retirement, and an increase in other expenses such as healthcare, continuing to make monthly mortgage payments can become a burden.

One strategy Clements recommends is to aim to have your mortgage end at roughly the same time you retire. With the many loan products available, this may be possible–and may be a big help to you.

Interested in your options to refinance your mortgage? Call me at (510) 610-5223 or send me an e-mail at ed.ramos@fpfmail.com ed.ramos@fpfmail.com to learn more and submit an application.