Mortgage

Should You Refinance Your Mortgage in 2022?

Should You Refinance Your Mortgage in 2022?
Written by Publishing Team

Is getting a loan to buy a new home a good move for you in the new year? Here’s how to find out.

There’s a reason many homeowners have been refinancing their mortgages since the start of the pandemic. Mortgage rates have remained at attractive levels since mid-2020, which presents a great opportunity to secure savings by swapping out existing mortgages for new ones.

If you haven’t refinanced your mortgage yet, you might consider doing so in 2022. But is that a good idea?

Interest rates should remain low

From a mortgage rate standpoint, next year should be a good time to refinance. Although mortgage rates have gone up quite a bit in recent weeks, they are still supposed, on a historical basis, to be pretty low to start 2022. Chances are, they won’t go up much throughout the year.

Increased equity should make it easier to do cash refinancing

Since home values ​​have increased a lot over the past year nationally, 2022 may be a good time for a cash refinancing. With regular refinancing, you can borrow the exact amount you owe on your existing mortgage. With cash refinancing, you borrow more than your remaining mortgage balance and get the rest in cash, which you can use for any purpose. The more home ownership you have, the easier it will be to do cash refinancing – and the more affordable borrowing you will get.

but should You are Refinance your mortgage in 2022?

Although interest rates should remain attractive next year and equity levels in homes high, 2022 isn’t necessarily the best time for you to refinance, even if it’s a good time for the average homeowner. If your credit score isn’t in top shape, you may not be able to get such a reasonable interest rate on next year’s refinancing. And if this is the case, it is better to wait for the refinancing and work to increase your balance.

Also, you may not have an indication of your long-term plans in the context of staying in your home versus moving. Currently, many people are leaving their jobs and finding new ones. If you are interested in going down this path and are looking for jobs outside of where you currently live, you may end up with an offer asking you to move sometime in 2022. In this case, mortgage refinancing will not be a success. sense.

When you refinance a home loan, you default on paying closing costs to complete it. These costs can be significant, and it can take up to two years to recoup these fees and start reaping the savings. If you’re not convinced you’ll be staying in your home that long, you may pay to wait for refinancing until you truly support your plans.

Do your research

If you hear that now is a good time to refinance, you may be interested in going down that path in 2022. If you plan to stay in your home for many years and your credit score is in good shape, it pays to move forward with refinancing. Just be sure to shop with different refinancing lenders so you can compare offers and get the best deal.

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