There’s a lot of talk about the Federal Reserve cutting back their buying of mortgage bonds, which is known as tapering. The purchases of mortgage bonds have helped keep interest rates low.
This can be very important to you if you are considering purchasing a home or looking to refinance your current mortgage to save money.
Interest rates are still extremely favorable. But this week at their meeting, the Fed said that they will likely begin reducing their purchases of mortgage-backed securities by the end of this year, with an official announcement likely on November 3. This could begin to raise interest rates as early as next year.
Once the Fed starts to pull back on their purchases, there is a risk that interest rates may move up, which makes this a great time to take advantage of low rates.
If you would like to take advantage of the low rates, while they are still available, to refinance here are some steps to follow:
Step 1: Set a clear goal and reason to refinance. From cutting your monthly payment, to shortening the term of your loan or pulling out equity for home repairs or paying off high interest debt. There are plenty of reasons why it’s smart to refinance now. You’ll want to clearly identify yours.
Step 2: Check your credit score. You’ll need to qualify for a refinance just as you needed to be approved for your original home loan. The higher your credit score, the lower your refinance rate will be.
Step 3: Determine how much home equity you have. To find how much equity you have acquired, check your mortgage statement to see your current balance. Then, give us a call so we can run an analysis to find the current estimated value of your home. Your home equity is the difference between the two. For example, if you owe $250,000 on your home, and its value is $325,000, your home equity totals $75,000.
Step 4: Get your paperwork in order. Gather recent pay stubs, federal tax returns, bank statements and anything else your mortgage lender requests. They may also look at your credit and net worth, so disclose your assets and liabilities upfront.
If you haven’t locked in a low rate, NOW IS THE TIME.
Give us a call today and let’s review your situation so you can capitalize on the market before it begins to move.