Home Sales Are Hot: But What’s The Story On Refinancing Your Existing Home?
Inventory of homes for sale are low and demand for homeownership is very high, resulting in homes selling very quickly. My REALTOR® colleagues are reporting to me that most homes are receiving roughly ten offers. Any way you slice it; this is very positive news for the housing market in Southern California. What about homeowners who aren’t in the market to sell? Is it also a good time to consider a refinance? The short answer is yes, albeit with a few caveats. Here are three things you should know if you’re considering refinancing your home now.
- Interest Rates are Terrific.
Interest rates remain at jaw-dropping lows. That means for example, a refinance on a 15 year fixed loan could result in your payment being similar to was if you were paying 6% on a 30 year fixed. Your payment could very well remain the same, or slightly higher because you’re paying so little for your interest rate. The great benefit to this is that you may be able to pay off your home loan so much sooner, helping you to reach your financial goals.
- Loan Approvals Are Happening Much Quicker
Following the upset in the housing market in 2008, everyone was confused. New rules, new regulations and widespread uncertainty resulted in lengthy delays on the status of your loan application. The dust has finally settled and lenders are once again able to provide you with a relatively quick approval on your mortgage application. Likewise, if you do not qualify you will be notified sooner as well, so there is no longer a lag time of waiting to see if a refinance is an option.
- Home Prices Are Rising, Which May Increase Your Home’s Value
One of the key factors lenders use when reviewing an application for a refinance is your home’s value. Your home’s value is based in part on comparable values in your neighborhood. According to DataQuick (www.dqnews.com), the median home sale price in the city of Santa Clarita was $374K in April 2012. By contrast in April of 2011, that price was $355K. Similarly, in April of this year homes in Stevenson Ranch sold for a median price of $462K, when compared to $405K during the same time last year. Values are going up. Check with your REALTOR® to better gauge your home’s value.
Lenders use the “comps” to determine a realistic selling price for your home, when determining whether to approve a loan, and furthermore, how much money they will lend. An increase in your home’s value is beneficial, and will increase the likelihood of a refinance approval.
Overall, it is an opportune time to consider buying, selling or refinancing your home. Even if you hadn’t considered a refinance thus far, it never hurts to do a little investigation to see if you could be saving money now and paying off your home faster for the future. Contact a local trusted mortgage professional today for a free consultation on options which may very well provide long term benefits for you and your family’s overall financial well being.