By Ryan Velez
Needless to say, the current state of your mortgage is going to be one of the major financial items on your mind should you have one. While it can be difficult to try and navigate the landscape, The Network Journal has put together an article profiling some mortgage trends for 2017 as well as advice for what homeowners should do to keep their finances healthy.
While the 30-year fixed-rate mortgage lingered below 4% throughout most of 2016, it jumped late in the year as the Federal Reserve began to hike short-term interest rates. The market also expected inflation stemming from President Trump’s tax and spending proposals. According to Freddie Mac, the national average 30-year fixed rate was 4.2% as of early February, but for now, at least, rates aren’t expected to go too much higher. According to forecasts from Kiplinger, by year-end, 30-year fixed rates will rise to 4.6%, and 15-year rates will end the year at 3.8%.
On the surface, low rates should mean good news for many, making homes more affordable for buyers and sparked refinancings by homeowners. However, what is the case historically is not the case currently. Guy Cecala, the publisher of Inside Mortgage Finance, says that borrowers earn the best rates only if they have at least 20% equity and a FICO score of 720 or more. What does this mean for you? Well, even if you already have a low-interest rate, it may be worth it to refinance from a 30-year loan to a 15-year term to build equity faster. Some may also consider using cash-out refinancings with a new, larger loans. The average fixed rate nationally for a $50,000 home-equity loan was 4.2% in early February, and the average variable rate for a $50,000 home-equity line of credit (HELOC) was 4.6%, according to Bankrate.com.
Of course, different situations demand different approaches. If you expect to move within seven years, consider a hybrid adjustable-rate mortgage with an initial fixed-rate period of three, five or seven years.
The article also recommends using large banks, credit unions and so-called non-bank lenders, such as Quicken, Freedom Mortgage, Caliber Home Loans and LoanDepot, to try and get the best deals on a loan.