(CNN) –
If you are a homeowner and are considering refinancing your mortgage, don’t wait too long. The current mortgage market is more favorable than ever for homeowners, and while it’s unclear how long these conditions will last, there are certainly mines on the horizon that require action now.
Refinancing your mortgage can not only save you thousands of dollars in interest, but also lower your current monthly payment. If you’ve been putting off refinancing, here are three reasons why you shouldn’t wait any longer and refinance your mortgage quickly.
Long-term 30-year Treasury bonds are usually the barometer of 30-year fixed mortgage rates, and when those bond rates began to fall at the start of the coronavirus pandemic, mortgage rates fell with them.
Even today, mortgage rates remain at historically low levels. According to Freddie Mac, the average interest rate on a 30-year fixed-rate mortgage in mid-November was 2.72%, the lowest in nearly 50 years. So if you are currently paying a higher rate on your mortgage than what is available today, now is a good time to see if you can get a lower rate with a refinance.
And if you already have a 30-year mortgage, now may be a good time to refinance and shorten the term. The interest rate on your 15-year mortgage is also at an all-time low. So you can take advantage of these lower rates to lower your current mortgage by a few years and save thousands of dollars in interest over time.
Click here to compare offers from refinance lenders on LendingTree, the online marketplace for loans.
In addition to a standard fixed rate mortgage – which guarantees you a certain interest rate for the duration of the loan – there is also a variable rate mortgage (VRM). These mortgages typically start with a fixed interest rate for the first three to seven years and are then adjusted annually for the remainder of the term. The new rates may increase or decrease each year, depending on the interest rates prevailing at the time.
In general, variable-rate mortgages offer a lower interest rate in the first few years than a standard 30-year fixed-rate mortgage. However, an odd feature of the modern market is that interest rates on fixed-rate mortgages are falling, while MRA rates are rising. The reason for this is that lenders ultimately expect general interest rates to return to previous levels and do not want people to take out a MRA from time to time only to refinance with another lender.
As a result, MRA interest rates are now in some cases even higher than those for fixed-rate mortgages. This means that this is your chance to get a fixed interest rate for the next 15 or 30 years, which you can usually only guarantee for five or seven years.
With interest rates for fixed rate mortgages competing with those for variable rate mortgages, you can save money by refinancing now for the long term.
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And if you already have a variable rate mortgage, you can avoid worrying about future adjustments by setting a low fixed rate now with a refinance. This can be ideal for people who initially planned to stay in their home only for a short period of time, but are now considering extending their home for a longer period of time.
Check your rates now on LendingTree and view offers from various lenders.
While it is impossible to predict exactly when interest rates will rise again, we can only be sure that they will not stay this low forever. Some industry experts even believe that interest rates could rise as soon as next year.
Mike Fratantoni, chief economist of the Mortgage Bankers Association, recently told CNN that homeowners should expect higher interest rates in the near future. We expect mortgage rates to rise in 2021, he said.
In addition, there is now a new negative market fee of 0.5% for refinancing loans over $125,000 secured by housing giants Fannie Mae and Freddie Mac, which together guarantee about half of all mortgages in the United States. Although the fees are technically borne by the lenders, homeowners can expect these fees to be passed on to them in the form of higher interest rates when they refinance.
Unfortunately, there aren’t many ways to avoid these new charges, but if you don’t want to be hit with a double whammy of higher market rates on top of more expensive rates with these charges, you need to start the refinancing process as soon as possible.
Save money and get money out of your home with refinance offers from LendingTree partners.
Use the online marketplace to get mortgage refinance quotes from multiple lenders.
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There are many ways to refinance your mortgage, but one of the easiest is through an online marketplace where you can get refinance quotes from multiple lenders at once, simply by entering your information and requirements.
An online marketplace like LendingTree allows you to compare options without having to contact individual banks, credit unions and other lenders. Startup is relatively quick, which is handy because time is short.
If you’ve been hesitant to refinance your home, now is the time to see if refinancing your mortgage is for you.
Learn more about refinancing on LendingTree and get quotes from different lenders.
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