With bond yields falling, interest rates are dropping and now could be the perfect time for homeowners to refinance.
Yes, bond yields have been falling. Yes, as an investor this might give you a reason to gulp. But, as a homeowner it could give you a reason to smile.
Why? Because the silver lining as yields fall is that now might be the perfect time to refinance. Currently, interest rates are incredibly low. As a homeowner, this could mean big savings for you.
That is just what Kelli B. Grant explored recently on USAToday.com. Her article, ‘Silver lining as yields fall: Time to refinance,’ looks at the current advantages and options for homeowners today.
Grant attributed low rates to falling oil prices:
The break for homeowners comes from investor concerns about falling oil prices and deflation…that has pushed bond yields lower, allowing mortgage interest rates to slip.
Grant also explored how the new FHA 3% down gives borrowers even more options:
The pool could be even wider. Fannie Mae and Freddie Mac recently announced new programs allowing borrowers to put as little as 3% down. That could open the refinance market for homeowners who don’t have much equity and wouldn’t previously have been able to refinance.
As you consider refinancing, it is important to remember that the rule of thumb is you want to drop your interest rate by at least 1%. While there are certainly exceptions to this rule, refinancing is about long-term savings. Like with your original loan, there are certain costs associated with refinancing your loan. These include your down payment and closing costs.
In many cases, if you are not able to drop your rate by at least 1%, refinancing could actually cost you money. And, that is not what anyone wants. Thinking about refinancing? Wondering what sort of rate you could quality for? Contact one of our loan officers today.