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Should I Refinance My Home in 2021?

July 19, 2021

2020 was extremely volatile. With the Pandemic and ever-changing circumstances, there were a lot of things to consider for your finances and home. Now that we’re halfway through 2021, lots of people are starting to ask questions like “should I refinance my home?” or “what are interest rates doing?”. Weighing up a mortgage and refinancing is no small consideration. The good news is that while mortgage interest rates are expected to increase in 2021, this is relative to the rock-bottom rates that we saw during the middle of the pandemic. Montana refinance rates are still lower than they were before the pandemic started. That means that now could be a good time for you to consider refinancing for significant savings.


What is refinancing? 

Refinancing a mortgage is the process of replacing an existing loan with a new loan that pays off the debt of the first one. You’ll keep your current house, and the new loan should ideally have better terms or features that improve your finances and savings to make it worthwhile. You might want to refinance if your existing loan is too expensive or the terms feel too long, or if the rates on a new loan create an opportunity for significant savings.


What role do interest rates and the current Mortgage rates in Montana play? 

Interest rates are rising from the low point they hit in the midst of the pandemic, which means that there’s less potential for savings than there was during the height of 2020. The trend seems to be towards a steady rise in rates going forward, too. That being said, interest rates are still well below pre-pandemic levels, so if you’re looking to finance it may still be possible to get a good deal if you act soon.


Should I Refinance my Home Now? 

There are many things to consider when refinancing your home loan (on top of the current Montana refinance rates). For example, consider:  

  • The Numbers: Refinancing your mortgage costs money. The fees can add up quickly, so many mortgage companies will waive fees for refinancing applications and legal fees. This fee reduction can amount to large savings for the homeowner but can cause a slightly higher percentage rate. It is important to talk about your loan options and to crunch all of the numbers before you make any decisions.  
  • Timing: The amount of time you plan to spend in your home will dictate whether or not this is a good time to refinance. If you are planning to move in the next few years, the savings may be minimal and you might not live in your home long enough to cover the costs of the new loan. To help with this, many mortgage lenders will allow homeowners who expect to live in their home for a minimum of three to five years to pay “points” and closing costs upfront. This option ensures the homeowner obtains the lowest percentage rate available. Consider your plans and timings before making any big decisions.
  • Your Finances: The best time to refinance is when it makes sense for your personal financial circumstances and goals. Before you make any decisions, it pays to look at your current financial situation and to assess your goals. For example, if you can get a lower interest rate, a refinance could help you save on your monthly payment. But, if you’re not feeling certain about your finances or your plans for your house in the coming months, it could make sense to wait a while.

Home mortgages are one of the biggest investments you’ll make in your lifetime. Your hard-earned money and home are at stake. If you’re asking yourself “should I refinance my home this year?”, working with a trusted partner can ensure that you have a guide for the process and can make the best decisions for your unique circumstances. Contact us to talk about refinancing your home. 

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