Refinancing a mortgage or taking out a home refinance loan means trading your old mortgage for a new one with a new balance. When a mortgage loan is refinanced, the bank or lender uses a new mortgage to pay off the old one. In some cases, homeowners refinance their mortgages to get a lower interest rate. Others may take out some of their equity to gain access to additional funds.
In early February of 2022, there was an increase in the number of homeowners applying for home refinance loans. But why the sudden surge? Should you, too, jump on the bandwagon and refinance your mortgage? Here’s what you need to know.
Reasons to Refinance Your Mortgage in 2022
The housing market has seen a lot of changes in the past year. If you’ve been thinking about refinancing your mortgage, now may be a good time to act. Here’s why.
Better Interest Rate
This year has brought a rise in mortgage rates, and they will keep inching higher slowly yet surely for the rest of the year. While they’re still relatively low, rates are expected to rise as the year goes on. If your existing rate is higher than today’s market rates, now may be a good time to refinance. But you’ll want to act fast before rates go up higher.
Surge in Equity
Many homeowners have seen an increase in equity due to a rise in home prices. Because their home is now worth more, they have more equity. This is a very convenient situation for those considering a cash-out refinance loan. Borrowers can use this option to acquire instant cash to pay for outstanding debts, home improvement projects, and other expenses. The more equity you have, the easier it is to qualify for a cash-out refinance and get a good rate.
Refinancing to a Fixed Rate
There are two types of mortgage interest rates – fixed and adjustable. With a fixed interest rate, you have the same rate throughout the entire duration of your mortgage. With an adjustable-rate mortgage, you pay a fixed interest amount for a set period (usually the first three to seven years). After that, the interest rates go higher or lower depending on the market.
Contact Us for More Info on Home Refinance Loans
Wondering if now is a good time to refinance your home loan? Let us help. We’ll walk you through your options and help you determine the best course of action based on your unique financial situation. Contact Mortgage Solutions Financial today to get started.