5 Reasons to Buy or Refinance a Home

It is not uncommon for people (especially singles and young couples who are just starting out with their careers) to have mixed feelings about purchasing a house. It is a big step and a huge financial responsibility. Owning a home can be a solid investment and you’ll want to make the right decisions.

Here are 5 reasons to consider buying a home:

1. Interest rates are currently very low. The lower the interest rate, the less you actually pay on a monthly basis for your house and the sooner you can pay the mortgage off. This also increases the amount you are able to spend on a new home. Use our calculator to compare renting vs buying.

2. A monthly payment many times is less than a rent payment. Homeownership becomes more attractive the longer you live in your home. Find out your local price-to-rent ratio (or P/R ratio). Find two similar homes, one for sale and one to rent. Then divide the sale price by the annual rent. If the result in less than 12, it may be a great to buy. If it’s 12-15, weigh your options.

3. There are low down payment and grant options available (to qualified borrowers). Depending on where you would like to purchase your home, and whether or not you have previously owned a home, you may be eligible for low down payment options or a grant. Visit with our home loan experts to learn more.

4. Buying a house could improve your credit score. Whether you remain in the house for the duration of the loan term or sell the home, the fact that you consistently made payments on a large debt will appear in your credit report. The paid-off mortgage will remain within your credit history for seven years and demonstrate to future lenders that you can be trusted to pay your debts responsibly.

5. You can make it yours. When a home is truly yours, you can do whatever you want with it! You can repaint it, tear down (non-load bearing) walls, renovate bathrooms and kitchens, landscape, etc . . . Home ownership after all is a rite of passage and part of the American Dream.

Do you currently own your home but are thinking about refinancing? Here are 5 reasons to consider doing so:

1. Interest rates are currently very low. You may be able to save money by securing a lower interest rate than you have on your existing loan. The traditional rule of thumb says refinance if your rate is one to two percent below your current rate. Contact us to calculate your break-even point to determine where the costs associated with refinancing the loan are equal to the savings.

2. In some cases, you can cut the term of your loan down without increasing your payment. As rates get lower, in some instances, you can refinance to a shorter term, while not increasing your monthly payment very much, if at all.  This allows you to build equity faster in your home and to be able to pay it off sooner.

3. You may be able to lower your monthly payments by refinancing to extend your loan term. Lowering your monthly mortgage payment by refinancing to a lower rate can make it easier to pay your mortgage on time every month while also possibly covering your other debts and expenses. And if you’re concerned about your ability to make your current mortgage payment in the future, lowering your monthly payment now can help relieve that pressure.

4. Get cash back for home improvement projects. If you have enough equity in your home, you may be able to do a cash-out refinancing to fund a kitchen remodel, add new siding, or complete a home improvement project you've been dreaming about. Another option is to get cash to payoff other high interest debt.

5. Possibly be able to remove PMI from your loan. If you originally purchased your home with less than 20% down, you most likely are paying PMI as part of your monthly mortgage payment. With you’re lower loan balance and increasing property values, in many cases we are able to remove your pmi as part of the refinance.

If you are ready to buy a home or refinance, you'll want to keep reading! Apply April 21st - June 30th for a home loan or refinance your current home loan, and get $500 off* the closing costs! This offer makes NOW the perfect time to make your move! Click here to find a First Citizens home loan expert nearest you or call 800-423-1602 for further details.

Article provided by home loan expert Kelly Rush.