Mortgage rates have recently dropped, presenting a prime chance to refinance your home loan. If it’s been a while since your last refinance, this could be an ideal time to explore how much you could save.
Earlier this year, I managed to secure a 2.625% rate on a 5/1 conforming ARM for one of my rental properties. I’ve got a few years before the rate adjusts, and with the property generating $4,500 a month in rent while I pay about $2,800 monthly (of which $1,350 goes towards the principal), I’m not overly concerned about potential rate increases.
Let’s rewind to about four years ago when interest rates spiked as investors shifted away from Treasuries, drawn by the allure of higher returns in equities. This “risk-on” approach was further fueled by anticipation of Federal Reserve tapering and expectations of rising inflation, pushing Treasury yields up significantly. However, rates eventually fell again as investors returned to safer assets amid stock market highs and government instability.
During the global pandemic, mortgage rates fell sharply, making it a potentially good time to lock in a lower rate. Banks also reduced their lending margins, meaning they weren’t charging as much over their own borrowing costs due to increased competition.
When I consider refinancing, I compare offers from my main bank and online through platforms like Credible, which connects you with numerous lenders without any obligation. This competitive approach often results in better deals, saving you more money.
Recently, mortgage rate charts have clearly illustrated a downward trend, presenting yet another refinance opportunity. Back in June 2016, I was thrilled to reduce the rate on my jumbo ARM to 2.375% for another property. Given the continued drop in rates this year, I’m planning to refinance yet again.
Five-year fixed terms currently offer advantageous rates. It’s a particularly good time for bond traders to think about refinancing, as the decision essentially acts like shorting bonds—your locked-in rate appreciates as interest rates rise and vice versa.
For those interested in growing wealth, learning more about personal finance is invaluable. It can significantly boost your chances of achieving financial independence. Moreover, exploring real estate crowdfunding can be a wise addition to a diversified investment portfolio, offering the flexibility to invest in various locations for potentially higher returns.
It’s unfortunate that mortgage rates have increased recently, but with inflation expected to stabilize and potential rate cuts by the Fed, there may soon be more opportunities to secure lower mortgage rates. Patience could be key.
