Homeowners thinking about refinancing might want to pull the trigger.
January might be a perfect time for homeowners to get the most for their dollar for a home refinance for a variety of factors. For one, experts project that home values will continue to rise throughout 2017. Higher home values impact refinancing in a number of ways. Owners whose homes have appreciated in value can perform what is called a cash-out refinance, which allows homeowners to use some of their home's value to make improvements and additions to a house, according to The Christian Science Monitor. This will help add value to a home in the long run, the source noted.
Individuals with a Federal Housing Administration-backed loan might also be able to remove their mortgage insurance as the value of their home continues to rise. Borrowers who have 20 percent home equity or more typically don't need to pay for mortgage insurance, The Christian Science Monitor reported. Mortgage insurance adds anywhere between 0.85 percent and 1.35 percent to a borrower's monthly payment, so individuals who can get rid of insurance will likely see their monthly mortgage payments drop as well.
There are other options to refinance as well. Until September, homeowners also have the opportunity to take advantage of the Home Affordable Refinance Program, which allows people with high loan-to-value ratios to refinance without paying for mortgage insurance.
To qualify for HARP, homeowners must have a mortgage backed by Fannie Mae or Freddie Mac, and they must also have a loan-to-value ratio greater than 80 percent. Borrowers cannot have had a late payment within the last six months, and they may only have one delinquency within the past year when applying for HARP. Lastly, applicants must have a mortgage that originated before May 31, 2009, to be eligible for the program.
Borrowers should carefully consider their options and determine the best way for them to refinance in the coming months.