November 18, 2021

Refinance: Still a great holiday gift idea

The holiday season is well within reach in 2021, and it's time to talk turkey.

Are you missing out on a great chance to refinance?

For homeowners, it is a good time to check in with your Bay Equity Home Loans mortgage lending team. Our local professionals have all the home loan products to fit your personal financial situation. You can still save thousands.

If you are not looking for a new purchase, Christmas 2021 might be the perfect season to give yourself the gift of a refinance. A reduced interest rate could mean a significantly lower monthly payment.

According to industry analyst Black Knight, only 22% of eligible homeowners chose to refinance when rates hit record lows between April 2020 and April 2021. The other 78% missed out on savings of as much as $300 a month.

"Rising mortgage interest rates" dominate the headlines, but don't miss out on the real story: Rates are STILL at Historic Lows!

There is also a cash-out refinance option. You borrow enough to pay off the current mortgage, and then take out more than you owe - generally up to 80% of the home’s total value.

Anything above and beyond the current mortgage payoff is yours to keep. Use the extra money to pay off bills, supplement savings, go back to school, buy a second home…maybe even start a new business.

The Federal Housing Administration and the Department of Veterans Affairs also offer their own versions of refinance loans. Bay Equity Home Loans can help you explore the possibilities.

So-called tappable equity - the amount of cash owners can take out of their homes while retaining at least 20% equity - rose by a collective $1 trillion in the second quarter of 2021. Over the past three years, the typical price gain on an existing single-family home totaled $89,900.

If you've put off refinancing your mortgage, you could be leaving money on the table. Even if you are not opting for cash-out, simple monthly savings on your mortgage payments add up. Lowering the interest rate could save thousands over the life of the loan.

Now may be a good time to take action.

Waiting could mean missing out. Inflation is growing at roughly double the pace preferred by the Federal Reserve.

The Fed has already announced it will reduce its program to prop up the bond market, which tends to raise interest rates organically. But if prices continue to rise, policymakers the may move to raise the baseline interest rates banks charge to lend to each other.

And while the Fed doesn’t set mortgage rates directly, these policies usually tend to filter down through the marketplace.