I was planning on writing about the mortgage process, steps to best prepare for buying a home, etc. However, the recent Omicron variant has led to another, potentially the last spike down for interest rates before they start to march upwards.
A few reasons why people should refinance their VA mortgages now:
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Lower your interest rate: This may be the last time to lower your interest rates and take advantage of near-all-time lows. The average home price is skyrocketing, why pay more $$$ towards interest than you have to?
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Lower your monthly payments: Lowering your interest rate and lower monthly payments go hand and hand. Lowering your interest rate from 3.75% to 2.875% on a 700K loan will save $400+ a month. That is a car payment, more money for your IRA, etc. Why pay this extra interest to the bank!?
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Eliminate mortgage insurance: With the massive appreciation over the last few years, many folks could already be sitting on over 20% equity. A refinance would allow them to reduce their interest rate AND eliminate mortgage insurance! That’s a no-brainer.
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Pay off your home faster: Another option is to simply lower your interest rate and reduce the years on the loan. Taking the savings from your lower interest rate and applying it towards the principal balance will pay your home down faster. Or, you can simply lower the term on your loan — say you had 20 years remaining at 3.75% and reduced it to 15 years at 2.75%. The lower interest rate would negate some of the increase in monthly payments, and you would be paying your home off 5 years quicker. Personally, I prefer leaving mortgages at their original terms (or rolling them back to 30 years) as the increased cash flow gives you options to pay down your mortgage more quickly or do something else with your money.
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Consolidate high-interest debt: Another option is to take out some equity to pay off higher-interest debt. This usually enables homeowners to increase their monthly disposable income considerably.
Wrap Up
There are many reasons to refinance now and I highly encourage homeowners who purchased and/or haven’t refinanced since February 2020 to look into refinancing. Refinancing usually requires no money out of pocket and can save homeowners significantly. Our C2 Financial team lends nationwide. Feel free to reach out for a free consultation with Oahu’s top VA mortgage broker to see if VA refinancing might be right for you!
