Interest rates have been low for months, but they recently dropped even lower due to “Brexit.” This could be good news for you if you own a Scottsdale house and have been thinking about refinancing. Here’s what you need to know if you’re not sure if this is the right move for you.
Interest rates are extremely low
About a year ago, interest rates for 30-year mortgages were around 4 percent. Just before the UK voted to withdraw from the European Union on June 23 – a move known as Brexit – Freddie Mac reported that the interest rate was about 3.56 percent, now the rate is a mere 3.4 percent.
As usual, interest rates on 15-year mortgage loans are even lower than 30-year loans. A year ago, the average rate was 3.24 percent. In June, it was 2.83 percent and then it dropped to 2.76 percent as of early July. Of course, the rate changes frequently, so you’re encouraged to keep an eye on it as you decide whether you should refinance your Scottsdale house. As long as it stays low or even dips lower every few days, it’s time to seriously consider refinancing your loan.
Refinancing can save you money
Refinancing your loan can save you money in a few different ways. The main one is that if you’re struggling to make your mortgage payment every month, getting a lower rate can likely save you hundreds of dollars monthly.
If you are fine with your current mortgage payment but see that the average interest rate now is much lower than your current rate, you can refinance from a 30-year loan to a 15-year loan. This will increase your monthly payments a bit – often by a couple hundred dollars – but it could save you over $100,000 in interest over the life of the loan.
If you have an adjustable rate mortgage, now is the time to refinance to a fixed rate loan. This way, you can lock in a low rate so you won’t be surprised by any changes in the near future.
How to prepare to refinance your Scottsdale house
If you suspect that refinancing is right for you, it’s time to talk to your lender to make sure it makes sense. After all, there are some fees involved, so you need to ensure you would save enough that it wouldn’t take long to break even and eventually come out ahead financially. You can start by using a refinance calculator to find out how long you would have to stay in your Scottsdale house to benefit from refinancing.
It’s also time to check your credit score to get an idea of what kind of rate you can get. You should also check your home’s value by seeing how much similar homes around you have sold for.
Start comparing lenders based on the rate each one offers you. Take the fees into consideration, since there are usually costs for the following steps:
- Document processing
- Title research
Each lender should give you an estimate of how much refinancing through them will cost. Get rates and fee estimates from at least three lenders before committing to one. Once you make a decision, be prepared to pay your fees and then sign some paperwork in a process that is pretty similar to buying a home!
Of course, if it turns out that buying a new Scottsdale house would be a better option for you than refinancing, you can count on The Matheson Team to help you get started today.
Realtor | Founder
The Matheson Team – RE/MAX Fine Properties
21000 N. Pima Rd., #100, Scottsdale, AZ 85255