The time is right for refinancing

There are many reasons to refinance your home or investment property. The year 2018 is your best opportunity. Whether you have an adjustable mortgage or need cash for debts, now is the time to refinance. I am very serious. Many economic and political factors tell us that if you wait beyond this year, interest rates could become very unpleasant.

How about what the Federal Reserve is saying? More interest-rate increases in the federal discount rate will occur. The discount rate is the rate of interest charged by the Federal Reserve to banks borrowing money from the Fed. And you can be certain that if the banks are paying a higher rate for their borrowedmoney, they in turn will increase the rate that they charge you.

As the U.S. economy becomes healthier and healthier, the Fed has a preference toward raising the rate to slow inflation. Yes, our economy is getting stronger, and therefore higher rates will follow. We have seen this cycle before. Rising rates by the Fed will also increase the yield or rate of our U.S. treasury bonds. As Treasury yields increase, lenders will most certainly raise interest rates on home mortgages. There is a direct correlation between rising Treasury yields and mortgage rates.

Realtors have seen rates increase during 2018. Francesca Stedman at Sotheby’s International Realty has one of the top-five-producing teams at the firm. She says, “We have seen interest rates increase from the 4 percent range for a 30-year loan to above 4.5 percent. I expect this trend to continue during 2018 and into 2019.”

Another Sotheby’s Realtor, Christian Margetson, says, “Without a doubt all home mortgages will have higher rates as we go toward the end of 2018 and into 2019. I am telling my buyers to secure their financing as soon as possible.”

So, what do you do about it? Gather your information and call your mortgage person. The rates are still very low, historically. A Fannie Mae 30-year rate of 4.625 percent is excellent.

Refinancing to get cash to retire other liabilities will prove to be wise. That is mainly because the other debt that you pay off will be at a much higher interest rate in the future. I have even visited with clientswho want to take cash out of the home with a new mortgage and invest in bonds and interest accounts, expecting higher rates on their investments.

Do not wait. Mortgage companies are always saying, Refinance! Now they are correct.

Jim Gay was a real-estate broker for 20 years and has been a financial consultant to Fortune 500 companies. He is currently a broker/owner ofThe Mortgage Place (505-986-9080) and can be reached at jim@jimgayhomemortgage.com.