With uncertainty about the presidential election, it may seem like the worst time to consider refinancing a mortgage. Regardless of whether Hillary Clinton or Donald Trump win the election, though, there are strong reasons for taking advantage of refinancing options now.
- Current interest rates in the U.S. are good. Research shows that many Americans spend at least a third of their income on mortgage payments, so reducing this is important. With mortgage rates below 3.5 percent, it's an ideal time to take advantage of money-saving deals. For example, a $300,000 mortgage financed at a rate of 4.5 percent requires a monthly payment of $1,520. With an interest rate of 3.5 percent, repayments would drop to $1,347, which means you could save $2,076 every year.
- Consumers can protect against future inflation by refinancing their mortgage at a fixed rate. By agreeing to a set interest rate for a specific period, homeowners often feel more secure. If inflation occurs, mortgage repayments won't change, allowing people to capitalize on the devalued dollar rate.
In election season, the future is uncertain. New presidents can bring changes - even if these are inconspicuous, they can have a ripple effect. Mortgage expert Chris Davies says, "During the election, it is unlikely that we will see a major shift in interest rates. (But) after the election, there are many unknown factors as to the monetary policies of the new administration."
Refinancing while interest rates are low and property owners remain confident could put people in a good position for the future.