Consider Refinancing Your Mortgage Now
Homeowners are finally starting to take a deep breath of relief as housing prices appear to have bottomed out.
For homeowners who are fortunate to remain in a positive equity position with their homes, consolidating debt and refinancing their mortgage might make the best sense right about now.
The reason is that interest rates are expected to climb and when they climb, there is a general belief that their increases will be rather steep and aggressive.
Two Indicators There are several reasons why now is the best time to refinance a mortgage, particularly with rates as low as they are.
Aside from the fact that a lot of other homeowners and mortgagors are taking advantage of the low rates and completing a mortgage refinance at record numbers, here are a two indicators that will result in higher mortgage rates in the near future.
1.
Inflation.
With all of the stimulus money having gone through the system, the value of the dollar has taken something of a hit.
With a depressed dollar, importing goods and services from foreign countries becomes more costly and since the country relies so heavily on imports to survive on a day-to-day basis -- whether it is consumable goods, commodities, even materials, etc.
-- consumers, businesses and governments can expect to pay higher prices for such goods.
This, in turn, bumps the inflation rate.
As inflation rises, so will interest rates because the people lending the money also need to earn more in order to purchase those goods and services.
2.
Demand.
With an economic recovery currently under way, borrowers will slowly find that aside from meeting tighter application requirements when it comes to applying for credit, they will be competing among a greater pool of applicants for that same money.
Contrary to popular belief, banks and other lenders do not have an endless supply of cash or credit; often, they will borrow at wholesale rates, add a spread, and lend it out to borrowers like you and me.
Since wholesale demand is already starting to increase, it will make sense to consider refinancing now rather than later since interest costs are favorable right now.
The Problem There is a problem with refinancing right now.
This is that house values are currently considered to be on the low end.
By waiting a year or more, homeowners will likely be able to draw more equity out of their home since market values will undoubtedly rise with time.
For some, a partial consolidation may not be reason enough to refinance right now.
For others who can make due, then of course it makes sense to take advantage of the low rates.
Besides, by the time property values show some tangible increases, rates could be low again.
For homeowners who are fortunate to remain in a positive equity position with their homes, consolidating debt and refinancing their mortgage might make the best sense right about now.
The reason is that interest rates are expected to climb and when they climb, there is a general belief that their increases will be rather steep and aggressive.
Two Indicators There are several reasons why now is the best time to refinance a mortgage, particularly with rates as low as they are.
Aside from the fact that a lot of other homeowners and mortgagors are taking advantage of the low rates and completing a mortgage refinance at record numbers, here are a two indicators that will result in higher mortgage rates in the near future.
1.
Inflation.
With all of the stimulus money having gone through the system, the value of the dollar has taken something of a hit.
With a depressed dollar, importing goods and services from foreign countries becomes more costly and since the country relies so heavily on imports to survive on a day-to-day basis -- whether it is consumable goods, commodities, even materials, etc.
-- consumers, businesses and governments can expect to pay higher prices for such goods.
This, in turn, bumps the inflation rate.
As inflation rises, so will interest rates because the people lending the money also need to earn more in order to purchase those goods and services.
2.
Demand.
With an economic recovery currently under way, borrowers will slowly find that aside from meeting tighter application requirements when it comes to applying for credit, they will be competing among a greater pool of applicants for that same money.
Contrary to popular belief, banks and other lenders do not have an endless supply of cash or credit; often, they will borrow at wholesale rates, add a spread, and lend it out to borrowers like you and me.
Since wholesale demand is already starting to increase, it will make sense to consider refinancing now rather than later since interest costs are favorable right now.
The Problem There is a problem with refinancing right now.
This is that house values are currently considered to be on the low end.
By waiting a year or more, homeowners will likely be able to draw more equity out of their home since market values will undoubtedly rise with time.
For some, a partial consolidation may not be reason enough to refinance right now.
For others who can make due, then of course it makes sense to take advantage of the low rates.
Besides, by the time property values show some tangible increases, rates could be low again.
Source...