With low interest rates and a tight Central Texas housing market some home owners are opting to stay in their current homes while looking for ways to reimagine and maximize their investment dollars. This month our Ingredients Newsletter featured some insights from our lending partner, Silvia Ward Carden, who answers some of the most frequently asked questions we encounter about refinancing in 2021.
Is now a good time for me to refinance? "Each situation is unique and people have different goals with the refinance so I encourage my clients to take a look at the numbers to see if it makes sense.
Some people have a goal to pay off their mortgage faster. Some common examples are: “before I retire” or “before my youngest graduates from high school.” Many are able to reduce their mortgage term (e.g. drop their 30 year mortgage to 20 or 15 years) while keeping the payment the same or very close to what they are paying now.
In addition to lower interest rates, many homeowners have been able to eliminate mortgage insurance (PMI) from their payments by taking advantage of our rapidly rising home prices in the Austin area.
And more than ever before, homeowners want to improve their homes (e.g., a kitchen remodel, adding a master suite or pool) and are tapping into their home equity to fund those projects at incredibly low rates. Today’s cash out refinance rates are still much lower than for a home improvement loan, personal loan or retail credit line."
In your opinion, where do you see rates going later this year?
"I expect interest rates to remain low until late this summer. They are largely driven by economic growth and as we see our economy gain strength (with help from Fed policy, wide-spread vaccinations and government stimulus), we will see rates rise. The thing to remember is that we have a long way to go before the number of jobs and business profits in the U.S. are back to pre-COVID levels. In the meantime, rates will remain low."
I refinanced in 2019. With the rates the way they are, should I refi again?
"Most people who bought or refinanced their home before 2020 can get a lower interest rate and reduce their payment with a refinance. And in many cases, closing costs for a refinance can be rolled into the loan so that out-of-pocket costs are minimal. I encourage clients to look at the big picture when it comes to cost, monthly savings and interest savings over the loan term and think about how much longer they will likely own their home. If they know they’ll be selling in the next 6 months, I discourage refinancing. But if they can break-even on the refinance within a short period of time and will own the home long enough to realize the benefit, it’s worth consideration."
We invite you to reach out to Silvia for more answers to your questions regarding your refinance possibilities!
And if you're looking to acquire or sell real estate, together Silvia and I can partner with you to help you leverage the current market conditions in your best interest. Mention this blog post and I'll provide you with a complimentary current competitive market analysis on your home which Silvia can use to help inform your refinance options!
Stay safe! We hope this article was helpful!
Joe Paul Reider
Home Style Austin Founder Austin Realtor®, CLRA Keller Williams Realty, Inc.
Email: JoePaul@KW.com Mobile: 512-222-3302 Web: JoePaulReider.KW.com
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