Refinancing Your Home: Future Options to Consider in a Higher-Interest Rate Market

Recently, interest rates have been on the rise with lenders across the board. When real estate interest rates are on the rise, potential homebuyers might feel hesitant about entering the market.

However, with various refinancing options available, rising interest rates should not deter you from purchasing a home. In this blog, we will explore why buying a home now can still be a viable option and discuss different types of home refinancing options.

Refinancing Options: Overcoming High-Interest Rates:

1. Adjustable-Rate Mortgages (ARMs): A great option for some buyers to consider is an adjustable-rate mortgage (ARM). ARMs offer a fixed interest rate for an initial period, typically between 5-10 years, followed by periodic adjustments based on market conditions.

While ARMs carry some risk, they often come with lower initial interest rates compared to fixed-rate mortgages, making them attractive in a high-interest rate market.

2. Cash-Out Refinancing: Cash-out refinancing is an option for homeowners who have built up equity in their homes.

With this type of refinancing, you can borrow against the equity in your home and receive the difference in cash. This can be beneficial in a rising interest rate market as it allows you to access funds for home improvements, debt consolidation, or other financial needs.

3. Government-Sponsored Refinancing Programs: Additionally, there are government-sponsored refinancing programs available, such as the Home Affordable Refinance Program (HARP) or the Federal Housing Administration (FHA) Streamline Refinance program.

These programs cater to specific qualifications and can provide opportunities to refinance your home even in a high-interest rate market.

4. Rate-and-Term Refinance: This is the most common type of refinancing where you replace your existing mortgage with a new one that has better terms, such as a lower interest rate or shorter loan term.

With a rate-and-term refinance, you can potentially reduce your monthly payments or pay off your loan sooner. 

5. VA Interest Rate Reduction Refinance Loan (IRRRL): If you are a veteran, active-duty service member, or eligible surviving spouse with an existing VA loan, you may qualify for an IRRRL. This program enables you to refinance your VA loan to obtain a lower interest rate, potentially reducing your monthly payments and saving money over time.

Although real estate interest rates are on the rise, it should not discourage you from purchasing a home now. By exploring various refinancing options such as fixed-rate and adjustable-rate mortgages, cash-out refinancing, or government-sponsored programs, you can still secure favorable terms and lower monthly payments.

With careful consideration and expert guidance on your side, like a highly-rated and recommender lender or financial advisor, you can make sound financial decisions and achieve your homeownership goals even in a high-interest rate market.

If you're currently looking for guidance in your new home search, give us at call to discuss your goals in your home search! You can reach Scott Zielinski at 856-265-8671 or e-mail Scott@zhomesrealestate.com to get started today!