Today’s housing market presents plenty of questions and opportunities for potential buyers and sellers, not the least of which are historically low-interest rates, competitive markets, and severely inflated materials costs for new construction or remodels. While things may seem confusing at first glance, there are many avenues that buyers can take when choosing to move or refinance their homes.
If you’re looking at a potential move, then you’ll probably be asking yourself what is best: to move or refinance. That’s the question we’ll answer today!
Follow the Equity
Many homeowners are looking towards greener pastures of late since America has found itself with historical amounts of equity. Homeowners are increasingly improving their equity positions in their homes and are looking at potentially pushing that equity into a new home purchase or whether to capitalize on some all-time low-interest rates.
Homeowners who have achieved significant equity in their existing homes will certainly juggle the idea of sticking with the equity they have and refinancing to lower their payments or potentially pay off their mortgage faster or purchase a new home. In both cases, you’ll need to follow the equity. In other words, is it better to refinance your existing home or use your equity to purchase a more expensive home?
Refinancing for Future Payoff
Refinancing in today’s ultra-low interest rate market could be a huge financial windfall for homeowners. If you’ve found yourself still in your first home, have never refinanced, and have accumulated equity, then you could very well see a big boon from refinancing in today’s market.
Refinancing means rolling your existing equity into your new home, a potential re-valuation of your home (meaning even more equity), lower payments, and potentially a shorter payoff time. One of the beautiful things for newer homeowners is that by refinancing, you can potentially rid yourself of the annoying private mortgage insurance or PMI simply by getting a favorable appraisal.
Moving into a New Home
Moving into a new home should also be a consideration if you’re looking to upgrade or if your family has simply outgrown the home you’re in. On the one hand, you can use the equity you’ve accumulated as a downpayment towards a new home, but on the other hand, you’ll certainly be in a battle in a seller-heavy market.
Moving into a different home may work out in your favor, but you’ll have to be prepared for the stress and potentially fast sales process as many homes throughout the country are selling in record time and at premium prices. That said, it’s important that you still have plenty of liquidity in your bank accounts to make sizeable cash offers or put down earnest money on a home.
No matter what choice you make, there are going to be advantages and disadvantages to each. We don’t currently know what the price of materials will do in the longer term which leads to a great deal of uncertainty to building a new home or making significant renovations to a current home. Whatever direction you choose to go, it’s important to get in touch with the loan experts at Tidewater Mortgage Services, Inc. to help guide you through these challenging, yet exciting times in the housing market.