Refinance Your Michigan Mortgage To Lower Your Payments And Save Money
Refinancing your home in this current environment can be overwhelming for many Michigan Residents. Michigan has gone through a rough ride with the housing market crash and recovery from the recession.
But mortgage rates are much lower than they were even just a few years ago. Homes in Michigan are seeing fantastic growth in home values, opening up numerous refinance opportunities. We are here to keep it simple and help you work through the questions that sometimes you don’t know you are supposed to ask!
5 Reasons to Refinance Your Mortgage
1. To Take Advantage of a Better Mortgage Rate
Mortgage rates are much lower than they were even just a few years ago. Many folks refinance to lower their monthly mortgage payment and keep more cash in their pocket to be used for other things. Others prefer to refinance into a lower term mortgage (such as a 15 or 20 year term) so they can pay off the home faster, saving thousands over the life of the loan. Whichever way works fits into your financial plan best, the savings could be enormous!
2. Cash Out Refinance (Becoming much more popular in Michigan!)
The Michigan Housing Market has had its ups and downs in the last few years. While the recession and housing bust were tough times to get through, housing values in Southeast Michigan are starting to grow at a fantastic rate. According to Realcomp, in May 2013 Southeast Michigan saw home prices rise a whopping 40% over the median prices in 2012. Many Michigan residents who were underwater on their mortgage a few years ago now find themselves gaining equity fast!
If your home has equity that you would like use for other purposes, consider a cash-out refinance. This is not for everyone though, so make sure to give us a call to discuss your options and goals with us and we’ll help you make smart financial decisions.
3. To reduce or alter risk (e.g. switching from a variable-rate to a fixed-rate loan).
If you currently have an Adjustable Rate Mortgage (ARM), after the initial period the rate will fluctuate higher and lower depending on the market. Considering mortgage rates here in Michigan are so low (and likely won’t go any lower), it makes sense to refinance into a fixed rate mortgage and lock in a low rate for the entire term of the loan. This eliminates all risk associated with ARMs as you know your low mortgage rate will stick with you as long as you have the loan.
4. To consolidate 2nd mortgages and other debt(s) into one home loan.
We see a lot of Michigan homeowners who have second mortgages, which typically carry a higher interest rate. If today’s mortgage rates are lower than both your current rates, you may be able to refinance both mortgages into a single loan and get one low monthly payment. Read more about refinancing with 2nd mortgages.
If you have numerous other debts such as high credit card debt, you can refinance your mortgage and take cash out to pay off those bills as well.
5. To free up cash in your monthly budget
Sometimes people take on a shorter term mortgage to pay off the loan aggressively, but could extra monthly income for other purposes. Other folks have no real urgency to paying off the loan and just want as much freed up cash as possible. In this situation, it makes sense to refinance into a 30 year mortgage to get the lowest monthly payment possible.
Michigan Refinance Information: How Has the Refi Market Been?
It’s no secret Michigan has gone through tough times. Many folks had interest rates around 7% to 8% and saw their home’s value plummet, leaving them little to no options to lower their mortgage payments. With thousands of Michigan residents severely underwater on their homes and unemployment soaring, we went through a housing crash that saw homes foreclosing left and right.
Once the dust settled however, the Fed stepped in to help residents refinance their mortgage and save money. The Fed starting buying tons of mortgage backed securities to help get mortgage rates in Michigan down to all time record lows. Along with low rates, the introduction (and later revamp in late 2011) of the HARP Refinance Program saw our Refinance activity jump from 57% in 2010 all the way up to 74% in 2012. While rates have started to tick up in 2013, they are still much lower than they were just a few years ago. Refinancing is still sharing 64% of the current mortgage market according to the MBA.The great thing about a refinance is that it is fact based. The numbers do NOT lie. Does your financial planner have any financial investments that guarantee savings like your mortgage can?
We are Michigan Refinance specialists and have been doing this for many years. Let us help you reach your finance goals!