Super-low rates look to be waning – Is it time to refinance your mortgage?

Super-low rates look to be waning – Is it time to refinance your mortgage?

Super-low rates look to be waning – Is it time to refinance your mortgage?

As June drew to a close, low rates for 30-year fixed-rate mortgagees crept up to the highest level of the month. The economy has been recovering well as the effects of the pandemic give way to strong sentiment among shoppers. Combined with one of the best times of year to buy and sell a home, the housing market is performing very well and the interest rates are edging up as a result. 

For those who own a home and don’t intend to make a move right now, it could be the right time to consider refinancing your mortgage loan. Taking advantage of the low rates and higher home equity with an inflated market could combine to be one of the most competitive ways to borrow against your home loan at a fantastic rate. 

Why it’s a great time to refinance

The average home selling price has leveled off from the sudden housing boom last year, but it hasn’t receded to what you’d consider the normal level. New applications and refinance applications have been holding steady about 14% lower than this time last year. At this point, both home buyers and mortgage lenders like MBANC can see that it’s a long-term scenario, not a flash in the pan. 

What that does is establish stability. Lenders are less worried that the market will tank, so taking equity out of your home is a relatively safe play for everyone involved. Of course, it still all depends on the usual criteria: credit score, loan type, income verification, and the like. 

Going through with cash-out refinancing right now can use your home’s inflated market value to unlock more equity than you would’ve had access to even 18 months ago, providing access to funds to buy a business, a second home, an investment property, or renovate your current home. 

And if you’re renovating, the timing is great. From all-time highs, building materials and lumber prices are dropping back into the stratosphere, declining over 40% by mid-June. Cashing out some of your equity can now go further with lumber that seems almost like a bargain compared to six months ago. 

High-balance or jumbo loans can benefit most

For those with jumbo loans that had been close to the allowed LTV ratio to forego private mortgage insurance premiums, the increases in market value are extremely beneficial. Now those jumbo loans have immediate built-in equity that can be accessed, and typically with more funds accessible than a conventional loan. If you’ve bought a home with a jumbo loan over the PMI threshold and have had PMI premiums on your mortgage payments, this could be the perfect time to refinance and remove the need for insurance at all. Of course, that’s based on the mortgage criteria including LTV. 

Low rates are the key

It’s possible that the home prices will stay above the norm for a while longer, but some or all of the benefit evaporates if the low rates disappear. Low interest rates are key to maintaining affordability when applying for a mortgage. If the application isn’t approved to lock in the rate, you may miss out on a competitive fixed-rate loan product. It could be a number of years until rates come down to this level again, if ever. 

Refinance your mortgage with MBANC

If you’re ready to find out how much equity could be available to you, reach out to a mortgage analyst at MBANC. Specializing in non-traditional income earners and high-value mortgages, our experts can get you approved and to close quickly – typically in 30 days or less. We’d be happy to talk with you about your options for refinancing. 

Mortgage Calculator