Refinance rates in Miami Fort Lauderdale Florida
Refinance rates in Miami Fort Lauderdale Florida. Should you refinance Miami Fort Lauderdale Florida your mortgage? Before deciding whether or not to refinance Miami Fort Lauderdale Florida, ask yourself these five questions:
What is the purpose of the refinance Miami Fort Lauderdale Florida? Refinance rates in Miami Fort Lauderdale Florida.
Do you want to pay less interest or lower your monthly payment?
Do you want to get out of a variable rate mortgage and lock in a low rate?
How long have you been on your property? And how long do you plan to stay in the property?
Can you qualify?
Do you have enough cash to cover the closing costs?
Have you shopped around for the best rate?
The right answer is not always obvious. And you need to be careful: most people giving you advice will be receiving large commissions if you do refinance Miami Fort Lauderdale Florida. Your interests are not aligned, and you should do your homework before you start.
Why Do You Want to Refinance Miami Fort Lauderdale Florida? Refinance rates in Miami Fort Lauderdale Florida.
There are three reasons why people consider refinancing their mortgage:
Current market interest rates are lower than your existing mortgage interest rate.
The savings from locking in a lower interest rate can be considerable. For example, a $200,000 mortgage at 5.5% would cost $43,995 more over 30 years than a 4.5% mortgage. Clearly, that is savings worth chasing.
Warning: Pay close attention to the total number of years you will be in debt across all of your mortgages. As a general rule, the longer you are in debt the more interest you will pay, regardless of the interest rate. Imagine you have a $200,000 mortgage for 30 years at 5.5%. After 10 years, you refinance Miami Fort Lauderdale Florida into a new 30-year mortgage at 4.5%. Yes, the new interest rate is lower. However, you will now be in debt for 40 years in total. And over 40 years you will pay $237,390 of interest. Had you kept the 5.5% mortgage for the 30-year term, you would have only paid $208,808 of interest. The lower interest rate ended up costing more than $28,000.
Tip: The best way to save money on your mortgage is to pay off your mortgage faster. When looking to refinance Miami Fort Lauderdale Florida, try to get a 15-year mortgage. If you can’t afford the payments, make sure you pay extra every month on your new 30-year mortgage to ensure you aren’t staying in debt longer than you should.
8 tips for refinancing as mortgage rates rise. Refinance rates in Miami Fort Lauderdale Florida.
So you want to refinance Miami Fort Lauderdale Florida, but mortgage rates are rising. Don’t worry — you haven’t missed the boat on your refi opportunity. Mortgage rates are still historically low, and they aren’t expected to exceed 5% in 2017, according to many economists and mortgage analysts.
Here are eight tips to help you successfully refinance Miami Fort Lauderdale Florida your mortgage as rates rise.
Make your move fast. Refinance rates in Miami Fort Lauderdale Florida.
Even though rates aren’t expected to shoot through the roof this year, they’ll likely stay on a steady, upward trajectory.
“If you’re thinking about refinancing, now probably is the time to do it,” says Lauren Lyons Cole, a certified financial planner and money editor at Consumer Reports, adding that rates are probably not going to be lower than they are right now.
It’s worth doing your research to see what rates you can get and then act swiftly before it’s too late.
Prepare in case rates drop. Refinance rates in Miami Fort Lauderdale Florida.
You’ll want to get your refinance Miami Fort Lauderdale Florida application in as soon as possible, not only to catch low rates before they rise, but also to avoid a backup in refinance Miami Fort Lauderdale Florida applications should rates suddenly fall, according to Casey Fleming, author of “The Loan Guide: How to Get the Best Possible Mortgage.”
“This is the biggest mistake I think people make,” Fleming says. “If you’re not in the pipeline ready to go when the interest rates start moving down, all of a sudden you have to get in the back of the line, and oftentimes you miss the dip in the rates.”
Fleming says that you’re not obligated to lock in rates when you submit your application. You can wait and watch the market for as long as you want.
If you’re not ready to submit your application just yet, work on keeping your credit score up, have your financial documents ready to go, and save money for the upfront refinancing fees. Just remember that rates are rising slowly but steadily.
Make sure your credit score is in good shape. Refinance rates in Miami Fort Lauderdale Florida.
Acting fast on a refinance Miami Fort Lauderdale Florida may not be worth it if your credit score isn’t in top shape. Your credit score plays a big part in the rates you can get on a mortgage. Just because low rates are out there doesn’t mean you’ll qualify for them.
Lyons Cole says that, in some cases, your credit can be easily bolstered. “I’ve seen people’s scores go from the 500s up to the 700s in about three months just from [quick changes] on your credit report.”
Some ways that you can work on your credit include checking your credit report for errors, paying your bills on time and keeping a safe distance from your credit limit.
“Mortgage rates aren’t going to go up a full point between now and the next three months,” Lyons Cole says. “Taking the time to get your credit score to a place where you qualify for the best possible rates could make a huge difference over the course of a 30-year mortgage.”
Use rising home prices to your advantage. Refinance rates in Miami Fort Lauderdale Florida.
Along with rates, home values are rising. Now might be a good opportunity for you to tap into your home’s equity through a cash-out refinance Miami Fort Lauderdale Florida. If you do so, proceed with caution. It’s risky to spend the proceeds from a cash-out refi on things that don’t rebuild your equity, like a car.
You can also access your home’s increasing value through a home-equity loan or home equity line of credit.
Refinance Miami Fort Lauderdale Florida into an ARM. Refinance rates in Miami Fort Lauderdale Florida.
Refinancing into an adjustable-rates mortgage in a rising rates environment can make sense since these loans tend to come with lower initial interest rates than fixed mortgages. They’re especially useful if you plan on staying in your home no longer than the fixed term of the loan.
Jenny Erdmann, a certified financial planner and vice president of Guide My Finances in San Diego, says that as long as an ARM makes sense for you and you’re aware of the drawbacks with this type of loan — like the possibility that your rates may eventually increase — you should try to get the lowest rates you can.
Refinance Miami Fort Lauderdale Florida to a shorter term. Refinance rates in Miami Fort Lauderdale Florida.
Refinancing into a shorter-term fixed rates loan can save you money in two ways: the interest rates are lower than a 30-year fixed-rates loan, and the shorter term means you’ll save more money over the life of the loan by paying less interest.
Here’s an example: Using a refinance Miami Fort Lauderdale Florida calculator, we plugged in the numbers for a 30-year, $300,000 mortgage taken out in 2010 with a 4.75% fixed interest rate. We refinance Miami Fort Lauderdale Florida it to a 15-year mortgage with a 3.50% fixed interest rate. Savings equated to $52,975 over 15 years. While your original monthly payment of $1,565 would take on an extra $311 each month, you would save more money in the long run and build equity faster.
Take into account that if a 3.50% interest rates went up a quarter of a percentage point, your savings would decrease to $47,145 over a 15-year period, and your monthly payment would increase by $344.
Pay points. Refinance rates in Miami Fort Lauderdale Florida.
Before your loan closes, you’ll have the option to pay points on your mortgage, which is paying money upfront, to permanently lower your interest rate. Fleming says that “if the additional cost makes sense, then absolutely pay points.”
While one point equals 1% of your loan amount, you won’t always have the option to pay in full points. The amount of money you have to pay to buy down your rates depends on the interest rates market, according to Fleming. He says that if the market is volatile, then you’ll probably have to pay more to buy down the rate. But if the market is stable, then you’ll pay less. Fleming says that it might make sense for you to wait until rates stabilize so you can pay less.
Refinance Miami Fort Lauderdale Florida out of an ARM, HELOC. Refinance rates in Miami Fort Lauderdale Florida.
If you’re concerned about the interest rates rising on your adjustable-rates mortgage or on your home equity line of credit, refinancing to a fixed-rates product can allow you to lock in new rates to make your monthly payments more predictable.
Fleming says that borrowers with an HELOC should watch out for the recast period. That’s when the draw period ends and you can no longer pay just the interest on the loan. Since rates are increasing, “anybody with an HELOC should definitely look at their options,” says Fleming.
Your options include calling your bank and seeing if you can switch your HELOC to a fixed rate, though the rates may go higher if you do. You can also refinance Miami Fort Lauderdale Florida the HELOC into a home-equity loan at a fixed rate. Another option is to refinance Miami Fort Lauderdale Florida your first mortgage and wrap the second mortgage into it. However, Fleming says if you end up refinancing to a higher rate, this strategy wouldn’t make much sense.
When purchasing a home, one of the most confusing aspects of the process is selecting a loan. There are many different financial products to choose from, each of which has advantages and disadvantages. The most popular mortgage product is the 30-year fixed rate mortgage. This article discusses how the 30-year compares to other mortgage products, benefits of the 30-year, and fees to avoid when selecting a 30-year mortgage.
Comparison to Other Mortgage Rates. Refinance rates in Miami Fort Lauderdale Florida.
When selecting a mortgage, there are many different mortgage products and terms to choose from, each of which has different interest rates. While 30-year fixed rates are near an all-time low and were recently below 5%, they are still higher than other options. 30-year rates can be compared to the following popular products:
15-year Fixed Rates – 15-year fixed rates are normally lower than a 30-year and, depending on the lender, the interest rate variance ranges from 0.50% to 0.75%. These rates are often lower because having a shorter term provides significantly less risk to the lender. Although interest rates are lower, 15-year payments are higher than 30-year payments because the loan has to be paid off in half the time.
Adjustable Rate Mortgage (ARM) – An ARM often comes with interest rates well below those of a 30-year. With an ARM, a borrower receives a very low fixed interest rate for a period of time, which normally ranges from 1 to 7 years, before the rate adjusts to a higher level. Normally, the shorter the initial low-interest period is, the lower the interest rate is. The most common ARM product is the 5-year Adjustable Rate Mortgage, which commonly comes with an interest rate 1% less than a 30-year.
Interest Only Mortgages – While they are not as frequently offered today as in years past, many borrowers still opt for interest only mortgages. Since interest only loans do not require principal payment and do not amortize, the balance due never decreases. Because of this, lenders assume a lot more risk and often require a sizable down payment and charge higher interest rates. Interest only mortgage rates are commonly 1% higher than 30-year rates.
The best time to get a 30-year mortgage is when interest rates are low. Interest rates tend to fluctuate quite a bit over time. Recently average 30-year rates were below 5%, but in the past few years have been well above 6%. Rates depend on various economic factors, including the following:
Supply and Demand – Like all other items in our economy, supply and demand have a significant impact on rates. If many people are looking to purchase a home or refinance Miami Fort Lauderdale Florida, rates tend to go up because of the excess demand. If interest rates are high and fewer people want to refinance Miami Fort Lauderdale Florida or buy a home, demand is low and the rates will fall.
Inflation – Inflation also has a large impact on rates. As an economy improves, inflation will naturally set it. To slow inflation, the federal government will be required to raise interest rates. If an economy is worsening and inflation subsides, the federal government will then reduce interest rates. While raising or lowering the Federal Funds Rate does not have a direct impact on mortgage rates, mortgage rates tend to follow the federal rates over time, and typically are a bit higher than the rate on the 10-year treasury notes. While most mortgages have a 30-year term, most people tend to move or refinance Miami Fort Lauderdale Florida roughly every 5 to 7 years, which is why the loans are indexed against the yield on 10-year treasury notes.