Bay Area refinance rates are still hovering below 3.5% on average, according to a recent industry report. Meanwhile, home prices in the area continue to rise. This makes it a good time to refinance for many Bay Area homeowners.
According to the latest Freddie Mac industry survey, the average rate for a 30-year mortgage loan held steady at 3.43% this week. The average for a 15-year fixed mortgage was also unchanged this week, remaining at 2.74%. This is good news for Bay Area homeowners who are thinking of refinancing their homes.
Bay Area Refinance Rates Remain Attractive
Thirty-year mortgage rates have been hovering below 3.5% since June of this year, according to Freddie Mac. They’ve been below 4% all year. With Bay Area refinance rates so low, many homeowners are now in a position to reduce their monthly payments as well as their long-term interest costs.
Housing analysts and economists expect rates to rise gradually through the end of this year and into 2017. So homeowners who are in the market for a refinance loan might want to move forward sooner rather than later.
The question is, would refinancing work to your advantage? This will depend on your current mortgage rate and your equity position, as well as your financial goals.
Will Refinancing Work for You?
If you’re refinancing primarily to save money, you’ll want to calculate your “break-even point.” This is the point at which your savings (from securing a lower mortgage rate) begin to exceed your closing costs.
To determine your break-even point, you need to know two things:
- How much you will pay in closing costs on the new loan
- How much you will save each month after refinancing
With these two figures in mind, you can do the math to find out if refinancing will benefit you. Specifically, you’ll know how many months it will take to reach the break-even point.
Here’s a real-world refinancing scenario:
John and Jane are planning to refinance their Bay Area home. Their lender tells them they will save $100 per month after refinancing, by locking in a lower rate on the new loan. Their closing costs will come to $3,000. With these two numbers, John and Jane can calculate their break-even point to find out when refinancing will benefit them.
Here’s how they would do the math:
- Determine the cost of refinancing ($3,000 in this case).
- Determine the amount of monthly savings ($100 per month).
- Divide the cost of refinancing by the monthly savings (3,000 / 100 = 30).
The answer (30) is the number of months it would take them to break even. After 30 months, their savings will begin to surpass the amount they paid in closing costs.
Let Bridgepoint Funding Help You
Bay Area mortgage refinance rates are very attractive right now, and home values have risen steadily over the last couple of years. This puts a lot of homeowners in a good position, as far as refinancing goes. But you need to know if it’s the right strategy for you.
Every lending scenario is different, because every borrower is different. Your situation may differ from the examples presented above. We can help you figure out if refinancing will work to your advantage.
Please contact us today, or use our online quote tool to get started.