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5 reasons to refinance your home before the election

(AP file)

SPONSORED — The upcoming election might be motivating you to ignore social media and maybe even the local news, but when it comes to your personal finances, this is one political race you can’t afford to avoid — though maybe not in the way you might think. If you’ve been considering refinancing your mortgage, there are many compelling reasons to take action now — not after the nation decides on a new president of the United States.

Rates are good… really good

Whether or not it influences your vote, chances are you’re probably looking to save more money than you currently are. And with Americans spending a third or more of their gross income on their monthly mortgage payment, according to the standard lender debt-to-income ratio, every penny earmarked for your lender counts.

If you haven’t refinanced your mortgage recently, you could be saving many more of those pennies. Today’s mortgage interest rates have fallen lower than 3.5 percent, even less than the 3.87 percent rates earlier this year, according to Freddie Mac.

You could be saving more money

With these kinds of numbers, borrowers shouldn’t be wasting money on interest payments based on rates from yesteryear. If you don’t know how much you could actually save, think about this: According to Zillow, a 30-year, $300,000 mortgage with a 4.5 percent interest rate will cost you $1,520 per month. Drop that rate to 3.5 and your payment shrinks to $1,347, saving you more than $2,000 per year.

“The best time to refinance is when there is a net tangible benefit,” said Chris Davies of Kiel Mortgage and host of Own It Radio. “This could be a reduction in payment or less interest paid or both. Since rates are at near historic lows, and the economy is showing signs that it is gaining momentum which could result in the interest rates going up.”

Inflation might cost you

The term “inflation” has long been associated with fear — fear of the cost of living rising, the economy stagnating and the dollar losing value on a global scale. And while there are many downsides of inflation, if you happen to have a fixed-rate mortgage at today’s low rates, inflation might actually do you a favor. That’s because you’ll essentially be paying back your loan with devalued dollars, according to Bankrate. With economic uncertainty standard during an election year, you may want to lock a great rate while you still can.

Values are rising

Already have a great mortgage rate? If you’re paying private mortgage insurance , it’s possible you’re shelling out more per month than you need to. With American home prices rising 6.2 percent from August 2015 to August 2016 according to Inman, you could have more equity in your home than you think. And that means you may be able to say “so long” to your PMI by refinancing.

Nothing is certain

The candidates aren’t the only wild cards involved in a presidential election. With sweeping administration changes a possibility, interest rates may not stay so low for long.
“During the election, it is unlikely that we will see a major shift in interest rates,” said Davies. “(But) after the election, there are many unknown factors as to the monetary policies of the new administration.”

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