Take Advantage of Low-Interest Rates to Improve Your Finances
Over the last few months, COVID-19 has rapidly changed the way the world works in so many ways. For so many people, it has changed financial situations. Some have lost their jobs or been put on furlough, while many others feel uncertain about the future of their career. The world economy has gone through many changes since the start of the pandemic, and as a whole, it has slowed down dramatically. Here’s how refinancing could help you get ahead in the era of COVID-19.
Why should I consider refinancing?
One of the most common reasons for refinancing is to get a mortgage with a lower interest rate. Since interest rates have dropped in recent months, it may be a good idea to refinance your mortgage so that you can lock in a lower interest rate. A lower interest rate can save you significant money over time. Your monthly payments will often decrease, and you will also start building equity in the property at a faster rate. Over time, this can make a significant difference in your finances.
A lower interest rate isn’t the only reason property owners decide to refinance. While refinancing, you may also choose to switch to a different type of mortgage. If you currently have a fixed-rate loan and you want an adjustable-rate one or vice versa, then refinancing can allow you to do this. It depends on what the rates are, how long you plan to hold the property, and other factors.
Some property owners also refinance in order to shorten the term of their loan. This may or may not save you money depending on your financial situation.
The final reason for refinancing is to acquire cash, which you can use to make other investments, to pay off debts, or for other purposes. With COVID-19 impacting finances, some people have refinanced their properties and used their home equity to stay afloat.
If you are in a good financial situation, you may wish to invest the cash and grow your wealth. If you are currently struggling financially, you may choose to use your cash-out refinance to improve your current financial security during these hard times.
Why are interest rates lower right now?
In an effort to fight against economic problems caused by the coronavirus, the U.S. Federal Reserve decided to cut federal rates in March of 2020, hoping to encourage people to keep spending and borrowing. The reason for this was to help the U.S. economy stay ahead of the damage caused by the coronavirus.
Right now, in the summer of 2020, mortgage rates are still at an all-time low. Many property owners have already refinanced, and many more are considering doing so. It is certainly worth considering if you own U.S. properties.
What should I expect during the refinancing process?
Refinancing a real estate loan is very similar to getting a mortgage in the first place. It entails a loan approval process that requires a home appraisal, a title search, and more. In general, the cost of refinancing a mortgage loan is approximately 2% to 5% of the loan’s principal. Before you refinance, you need to ensure that the cost is worth the amount of money you will make when you refinance and invest the difference.
Are there any differences when refinancing as an overseas real estate investor?
As a foreign investor in U.S. properties, you have the right to refinance any property that you own. However, many United States-based banks do not accommodate refinancing for overseas investors. USA Mortgages is a specialized lender for foreign real estate investors in the U.S. They understand that the United States’ credit and lending system isn’t ideal for foreign nationals who want to finance (or refinance) the real estate properties that they hold in the U.S.
If you are an overseas or foreign investor who is interested in refinancing a mortgage, talk to the experts at USA Mortgage.