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Mortgage & Home Buying

It's Not Too Late To Refinance

The days of ultra-low mortgage rates will soon be a sweet memory, but if you haven't refinanced, there's still time. With current interest rates hovering around 3.60% APR, this might be the last opportunity to take advantage of big savings.

Why refinance?
Most homeowners refinance for one of four reasons: to lower their interest rate, get out of or into an adjustable-rate mortgage, shorten the term of their loan, or tap into equity for home improvements or debt consolidation. Because refinancing costs money and time, it's important to understand the true financial impact before moving forward. Typically, you'll pay closing fees which can include an appraisal, title search, and application fees. You can also consider paying points to lower your rate even further. Along with low rates at Orange County's Credit Union, we also offer no fee options for select products which may help with closing fees. Use our mortgage refinance calculators to help you understand your costs.

If you're planning to move soon, consider an ARM.
Adjustable-rate mortgages (ARMs) came under major fire during the housing crisis, when too many homeowners got hit with monthly payment increases they couldn't afford. Today's lending restrictions made ARMs less risky, so there are still opportunities where one might make sense—it might be right for you if you only plan to stay in your home for the next 5-10 years. During that time, you can take advantage of the low interest rate and payment, as you prepare to move on to your next home.

ARMs typically have a lower starting APR than a standard 30-year fixed rate option; which means you can take advantage of lower monthly payment while you're in the home, and then sell before the increase. Just be sure you know when and how your rate and monthly payment might adjust if it turns out you want/need to stay put. The chances of you being able to refinance to a lower interest rate are less.

Refinance to a shorter term.
If you can swing a higher monthly payment, refinancing to a shorter-term fixed-rate loan is an excellent way to lock in a low rate, save money, and build equity faster. The rates on 10- and 15-year fixed rate mortgages are lower than a 30-year fixed rate mortgage, and because payback is condensed to a shorter term, you'll pay much less in interest over the life of the loan—potentially saving tens of thousands of dollars.

Shore up your HELOC.
If you currently have an adjustable-rate home equity line of credit (HELOC) or have a HELOC that's about to expire and the payment will increase significantly; you might consider switching to a fixed-rate product, either by refinancing the HELOC into a home equity loan or combining your first and second mortgages into one new fixed-rate loan. Benefits of refinancing your HELOC may be a lower fixed interest rate, less finance charges over the life of the loan, and an overall monthly savings on the payment.

Prepare now.
Check your credit. Before you apply, make sure your credit is in good shape so you can be approved for the best available rate. Don't wait to apply. Even if current rates aren't exactly where you'd like them to be, apply now without locking in your rate. This way, if rates do drop, you're ahead of the game and can lock in when you're ready.

Need guidance? Discuss your options with one of our Mortgage Consultants. We'll help you determine if a refinance is in your best interest. 

Normal approval standards apply. Membership in Orange County's Credit Union is required prior to obtaining a home loan and is available to anyone who lives or works in Orange, Los Angeles, Riverside, or San Bernardino Counties. Membership is $5. NMLS #403462

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