It May Be Time for You to Refinance

It May Be Time for You to Refinance

It May Be Time for You to RefinanceWith talk about a possible Federal Reserve (Fed) hike in the prime interest rate, Janet Yellen has much of America scrambling to make sense of their savings. Many of us have the bulk of our money tied up in our homes, and any change in the prime rate brings with it one major question:  Is it time for me to refinance?  While no one but you knows the true answer to that question, we’ll do our best to explain what could happen and what it means for you, to help you make the best decision for you and your family. 

Question:  Why would the Fed raise the prime rate?

 Answer:  Unfortunately, we cannot guess all of the factors, but a good indication that rates might go up is the fact that rates haven't gone up since the Bush administration. Interest rates aren't supposed to be this low for this long. When rates are low, Americans are encouraged to spend more and this means more overall debt. The Fed may want to decrease the spending by raising the prime rate.

 Question:  How would a rate hike affect my mortgage?

 Answer:  A rate hike can only have one of two effects on your mortgage:  It can raise your payments or do nothing.  The only way a rate hike won't raise your payments is if you have a fixed-rate mortgage; otherwise, your monthly payment is going to go up.

 Question:  I already have a fixed-rate mortgage.  Is there any reason to refinance my home?

 Answer:  If you were planning on refinancing at any point during the life of your mortgage, the best time to refinance would be before the prime rate increases.  Once the prime rate goes up, you won't be able to get as favorable a rate on your next loan as you would now, even if you're moving from fixed rate to fixed rate. 

Question:  Should I buy points?  Does the prime rate affect the price of points?

 Answer:  The Fed won't change the price of points on your mortgage, just the starting point for your rate before you buy any.  Whether you should buy points depends on a lot of different factors, and your best plan is to talk directly to one of our specialists.


 If you still have questions you can call us at 713-799-6200 or visit one of our nine branches.