2015 was the Year of Equity. Many of our members on the Front Range of Colorado saw the equity increase in their properties, and it was a great time for them to consider refinancing. Those who didn’t refinance their mortgage last year may want to consider it this year.
Depending on your situation and market conditions, refinancing your mortgage could result in lower monthly mortgage payments, a lower interest rate, a fixed rate, or a reduced loan term. And people refinance for many different reasons. You could refinance to get cash out of your home to purchase another property, buy a car or pay for education. Refinancing can also allow members to remove their PMI (primary mortgage insurance). In an event of a divorce, a member might need to refinance to change households.
Why was 2015 a “Refi Rally”? Low rates (in the 3% range) drove the boom in refinances last year. The MBA (Mortgage Bankers Association) predicts rates will go to 4.3% by the end of the year for a 30-year fixed mortgage (as of February 18, 2016). It’s important to note that the MBA made a similar prediction last year, and rates went into the opposite direction expected.
There are a variety of reasons to refinance, regardless of what happens in the rate environment this year, so we expect refinances will continue to be a popular option with our membership.