It’s no secret that interest rates are on the rise. In fact, they have been slowly creeping up for the past year. If you’re like most people, you’ve probably been wondering when is the best time to refinance your mortgage. Now may be a good time to consider a 15-year or 30-year fixed-rate mortgage, especially if you want to lock in a low-interest rate. Keep reading to learn more about fixed-rate mortgages in Maine and how they could benefit you!
How do Variable Rate Loans Work?
Variable rate loans are loans where the interest rate can change over time. The most common type of variable-rate loan is an adjustable-rate mortgage (ARM). With an ARM, the interest rate changes based on an index, which is usually the yield on a Treasury bill. In these types of loans, your monthly payments depend on market conditions. For example, your monthly payments will increase if you have a variable rate loan and rates rise. On the other hand, if rates fall, your monthly payments will decrease.
The initial interest rate of a variable or adjustable-rate loan is lower than that of a fixed-rate mortgage, which makes it attractive to borrowers looking to save money in the short term. However, because the interest rate on an ARM can rise after a few years, these loans are riskier in the long term. Therefore, many experts recommend against them – especially now that rates are rising.
If you have an adjustable-rate mortgage (ARM) or a variable-rate loan, you may be able to refinance into a 15- or 30-year fixed-rate mortgage without much difficulty. In fact, this may be a good time to do so since 15- and 30-year mortgage rates are still relatively low. However, keep in mind that your monthly payments will be higher with a 15- or 30-year mortgage than with an ARM.
Should You Refinance Your Mortgage When Interest Rates Rise?
Mortgage rates are rising, but that doesn’t mean it’s time to panic. If you have a fixed-rate mortgage, there’s no need to be concerned about the increasing interest rates – your monthly payments will stay the same for the life of your loan. However, if you have an ARM or are considering taking out a new mortgage, you may want to act before rates go any higher.
While there’s no “right” time to refinance, experts generally agree that now is a good time to consider a 15- or 30-year fixed-rate mortgage. By locking in a low-interest rate, you can protect yourself from future rate hikes and save money over the life of your loan.
You should talk to a Maine-based mortgage lender to learn more about your refinancing options. They can help you compare 15-year and 30-year mortgage rates and answer any questions you have about the process.
15 vs. 30-Year Mortgage: Which Loan Is Best for You?
When deciding between a 15-year and 30-year mortgage, it’s important to consider your financial goals. If you want to pay off your mortgage quickly, a 15-year mortgage is the way to go. These loans typically have lower interest rates than 30-year mortgages, so you’ll save money in the long run. On the other hand, if you want to keep your monthly payments low, a 30-year mortgage may be the better choice.
If you’re looking for a 15-year fixed-rate mortgage in Maine, you can expect to pay around 5.49% APR. This is lower than the national average of 5.60% APR for 15-year fixed-rate mortgages. For 30-year fixed-rate mortgages, the average APR in Maine is currently around 6.13%. This is higher than the national average of 6.10% APR for 30-year fixed-rate mortgages.
Keep in mind, however, that your interest rate will vary depending on factors like your credit score, loan amount, and down payment. You can use our mortgage calculator to get customized rates for 15-year fixed-rate mortgages in Maine.
The best way to decide which type of mortgage is right for you is to talk to a financial advisor or lender. They can help you compare 15- and 30-year mortgage rates and terms and determine which option makes the most sense for your situation.
Avoid The Volatility Of Prime Interest Rates
As interest rates slowly rise, those with adjustable-rate mortgages (ARMs) may feel uneasy. After all, an increase in interest rates means an increase in your monthly mortgage payment.
The prime interest rate was a whopping 20.50% in August of 1981. This caused many people with ARMs to see their monthly mortgage payments skyrocket. In fact, some people were forced to sell their homes because they could no longer afford the payments.
While we’re not currently experiencing rates as high as we did in 1981, it’s still important to be aware of the potential for rate increases. If you have an ARM, you may want to consider refinancing into a 15- or 30-year fixed rate mortgage while rates are still relatively low. This will protect you from any future hikes in interest rates and help you keep your monthly payments affordable.
At Integrity Mortgage, LLC (NMLS #1692497), we have the financial resources and the integrity to help you save money and live well. Reach out to us today to learn how we can help you thrive with a fixed-term loan.