This not only has an impact on those looking for a new home, but it may be a great time to refinance and lock in a lower rate.
“Withdrawing money on a mortgage is still the cheapest interest rate than a second a line of credit or even withdrawing money from a credit card,” said Paul Salazar.
Salazar is a mortgage originator with Sierra Pacific Mortgage and claims that soaring home prices have resulted in a record amount of home equity.
Although interest rates have risen slightly from 2020, they are still low enough that many homeowners are wondering if now is the time to refinance their home loans.
“It is still historically low. In 2003, when I bought my house, the interest rate was five. Right now, the average interest rate is between 3.875 and 3.5, so if it goes up a bit, it’s still fine, ”says Salazar.
Salazar recommends that you consider refinancing if your credit rating or debt-to-income ratio has improved significantly since you first took out your home loan.
Using the equity in your home to reduce monthly payments or withdraw money is also something he sees a lot these days.
“This round in 2021 is the people who are actually pulling out equity because values are going up, so now they can withdraw equity, renovate their home, pay off debt, go on vacation. are the things that are happening right now with home refinancing, ”said Salazar.
While lower interest rates benefit most homeowners, refinancing may not make financial sense for some.
Experts warn that if you can’t afford the closing costs, or if you plan to move soon, you won’t recoup the closing costs before you sell.
Experts say that when refinancing, you will need a credit score of over 700 because the better the credit score, the better the interest rate.
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