Is Refinancing Your Mortgage a Good Idea? NEPA Mortgage Refinancing Lawyers
For many across the United States, 2020 was the year to refinance a home mortgage due to low interest rates. In March 2020, the Federal Reserve took steps to protect the housing market from damage due to the economic downturn that was likely to result from COVID-19. This meant for many looking to buy a home or refinance, it was the time to do it with lower interest rates. But now in 2021, is refinancing your mortgage a good idea? The NEPA mortgage refinancing lawyers of Mazzoni Valvano Szewczyk & Karam explain.
Refinancing Trends in 2021
From March to December 2020, a 30-year fixed-rate mortgage was at an interest rate of 2.67%. However, as we entered 2021, that rate began to increase. This led to an overall decrease in those looking to refinance their home mortgage across the country. In fact, according to the Mortgage Bankers Association’s seasonally adjusted index, refinance rates are 43% lower than they were last year.
Yet, rates have been dropping over the past five years from 4.94% for a 30-year fixed-rate mortgage since November 2018 to 3.05% in mid-March 2021.
So, while we saw a slight increase in interest rates since the pandemic began, it’s still much lower than it had been in years past. And the increase is not expected to be a substantial one, as long as federal policy does not create an increase in interest rates.
Why Are Interest Rates Changing?
Interest rates on home loans change for a variety of reasons, the most common being:
- Federal Reserve monetary policy
- Inflation
- Economic conditions
- Housing market conditions
- The bond market
- The borrower’s credit score
- Borrower’s debt-to-income ratio
What we think of as one of the most important reasons is the economic situation of the country. During economic growth, consumers are likely to buy more which causes mortgage rates to rise as the demand grows. But in an economic decline, the opposite takes place because fewer people are looking to buy a home.
But in addition to the economic makeup of the state, mortgage rates are also impacted by a borrower’s ability to repay. Factors such as credit score and debt-to-income ratio will ultimately play one of the largest roles in your mortgage interest rate.
Lenders will assess the risk of default and look at your debt-to-income (DTI) ratio and your credit score. A high DTI and a low credit score means you’ll likely end up with a higher mortgage interest rate. But, if you do not have large debts and a decent credit score, refinancing right now may be a great option for you.
But no matter the situation, refinancing your mortgage is ultimately a large decision and one that shouldn’t be taken lightly. If you are considering refinancing your mortgage, you may need legal assistance–and Mazzoni Valvano Szewczyk & Karam can help.
Is Now The Time to Refinance Your Mortgage? NEPA Mortgage Refinancing Lawyers
At Mazzoni Valvano Szewczyk & Karam, we want you to get the best possible outcome for your mortgage, one that fits your needs and won’t hurt you financially. We will negotiate with lenders on your behalf to make sure your costs are minimal. If you are considering refinancing your mortgage, don’t go through the process alone. Contact the NEPA refinancing mortgage attorneys at Mazzoni Valvano Szewczyk & Karam today for a free consultation. Serving clients in Lackawanna and Luzerne counties, Wayne County, Monroe County, and Pike County.
