The federal reserve recently raised interest rates, and if you have an Adjustable Rate Mortgage (ARM), it may be a good time to considerrefinancing your home. There’s no one-size-fits-all answer to whether your should refinance, so here are a few of the main considerations.
How long does your introductory rate last?Most ARMs have afixed ratefor the beginning of the mortgage. This is an introductory period (usually 3-10 years) when your rate will remain constant before it can be adjusted. If you have several years left in your introductory period, you can monitor interest rates for a while before making a decision. But if the intro rate is ending soon, it’s a great time to explore refinancing at a fixed rate.
How long are you staying?If you plan to sell your home soon—especially if you’re still on a fixed introductory rate—there’s not much motivation to refinance. But if you’ll be at your home indefinitely, you should consider yourrefinancingoptions. You could eliminate the stress of not knowing what your futuremortgagerate andpaymentswill be.
What’s your loan balance?The change in your mortgage payment will of course be determined in part by your remaining balance. If you owe $100,000-$200,000, a new interest rate may not greatly affect your monthly payment. On the other hand, if you owe $500,000, a change in interest rate could lead to a much higher payment.
Other factorsThe previous items are just a few of the factors that should go into a decision about refinancing. Changes in income and your currentcredit scoreshould also be considered, so be sure to weigh your options and make an educated decision.
Author:Errin C. Brown Phone: 208-869-8030 Dated: March 28th 2016 Views: 355 About Errin C.: Errin C. Brown is an Associate at National Broker Connect. She is a Treasure Valley native and licen...
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