With mortgage rates defying all expectations and dropping even lower since the start of the year, this could be a good time for homeowners to consider refinancing, says the Washington Post.
Back in December, as the Federal Reserve stood poised to raise interest rates for the first time in years, many sensible homeowners rushed to refinance their properties, locking-in low rates before the expected hike in mortgage rates. A hike that never came. In fact, those who waited, or just didn’t get themselves organized in time, may now be reaping the rewards, as, contrary to expectations, rates have since dropped to levels approaching their all-time low. According to Freddie Mac, the rate of the average thirty-year fixed mortgage has fallen from 4.01 to 3.62 percent since the beginning of January. Economists have since adjusted their forecasts for 2016’s rates.
Speaking to the Post, Anders Liljehom from Portland said he refinanced his home back in December, just days before the Fed raised rates. At the time, Mr Liljehom was pleased to have “outsmarted” the economy, but mortgage rates are now lower now than when Liljehom refinanced and he said it hurt to know he could have gotten a lower rate if he’d waited:
I could have saved more money if I’d waited […] My interest rate is still quite low, but it does sting a little knowing it could have been lower.
Refinancing your mortgage at a lower rate could save you a lot of money over the years, says a recent San Francisco Chronicle report on refinancing. Refinancing would allow you to divert money saved on interest payments towards other purposes – such as paying for children’s education, carrying out upgrades to increase the value of your home, our investing in more profitable ventures. However refinancing may not be the best move for absolutely everyone: if you are in the position to pay off your mortgage entirely, this would likely be the best plan of action, as it would allow you to save a large sum of money that you would otherwise pay out in interest on the loan over time. Although, in the SF Chronicle report, Bernie Katzmann of Vanguard Properties warned that anyone considering this latter option should make sure they have sufficient liquid assets available to cover any unexpected eventualities – such as the need for emergency medical treatment or loss of employment – before deciding to pay off their loan.