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November 10, 2014
With the end of the year approaching, we've assembled 5 reasons you should refinance before 2015.

image by Tim Wilson

There are dozens of reasons to refinance—but we’ve assembled a few to demonstrate why you should refinance your home loan now before 2015.

With the new year comes new beginnings, and the end of certain opportunities. For anyone who’s thought about securing a lower mortgage rate, here are the top five reasons you should start the process today.

1. The Low, Low Rates

After the historically low rates of 2012, the current rates, hovering around 4%, might not incentivize most homeowners to refinance. But they should. Compared to pre-recession mortgages, today’s rates remain incredibly low, and analysts don’t expect them to last long. For years, 6% or higher was the norm for home loans, and millions of homeowners throughout the country have monthly mortgage statements to prove it.

It’s always possible the current rates will last a few more weeks or months, but it’s always a risk. If you could save substantially now, you should lock in the current rates. The sooner you refinance, the sooner you’ll start saving on your monthly payment—and the more you’ll save over the life of your loan.

2. The End (of HARP) Is Nigh

Well, not, tomorrow “nigh,” but the end of the Home Affordable Refinance Program is definitely coming. This is especially pertinent to anyone who’s stuck with a high mortgage rate and negative equity. HARP also allows  homeowners with underwater mortgages to refinance. Almost a million Americans have used the program to save thousands each year—and more over the life of the loan.

If you’re struggling with staying afloat on your mortgage, you should refinance with HARP. According to Total Mortgage the program has extended through the end of 2015. It’s a full year away, but rates are poised to increase by then, maybe substantially. Acting now will ensure you save the most to rise above your underwater mortgage sooner.

3. New Year, New Monthly Budget

The new year is a great time to make life changes, and whatever you resolve to do, a bigger cash flow will help. Refinancing to secure a lower rate will mean your monthly mortgage payments go down, which means you’ll free up hundreds each month to go toward savings, a hobby or a dream vacation. Refinancing can take up to 45 days to complete, which means if you apply today, you should receive your new mortgage and new monthly payment just as 2015 begins. There are few better ways to ring in the new year than with a bigger monthly budget.

4. An Advance on Gifts

There are really two good reasons to refinance right before the holidays hit.

If you’ve been dragging your feet about refinancing due to the closing costs, ’tis the season to ask for family assistance. Many homebuyers receive gifts from their parents and other relatives to help with down payments and closing fees, and lots of family members are as willing to help with refinancing costs, especially if you’re struggling with payments. In lieu of presents, ask friends and family for financial gifts to go toward fees.

If you can manage on your own but still feel the financial stress of holidays approaching, a cash-out refinance can provide the funds you need for gifts and travel. By trading in equity you’ve built up on your home, you can have a little more cash-in-hand for a little more peace of mind—whether you want to spend that on presents or other debts.

5. Potential Tax Deductions

Unfortunately,  if you’re refinancing your first or second home, you can’t write off the closing costs and fees. Mortgage points from the interest of a loan remain the only tax-deductible costs of a mortgage. If you own rental property, though, everything you spend on refinancing can be written off on your April taxes—as long as you close on the new mortgage before the end of the year.

Whatever your goals are for refinancing, we’re sure they’ll be best met before the end of the year, and we want to help you achieve them. If you’ve been on the fence about refinancing, now is the time, so you can start off 2015 right. We’d love to talk to you more about the refinancing process and the current low mortgage rates, so contact us today!

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