Categorized | Finance and Mortgage

Fixed-Rate Mortgages Are the Most Popular Refinance Option

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According to the most recent reports, homeowners opting to refinance are demonstrating a clear preference towards fixed-rate loans over their adjustable-rate counterparts. The preference towards fixed-rate loans should not come as a surprise, though, as mortgage loan rates are at historic lows.

Rather than taking the risk of having an adjustable-rate loan increase in the coming years, homeowners are opting for fixed-rate loans to take advantage of the current record-low interest rates. Currently, the average thirty-year fixed mortgage rate is just over four percent, and the average fifteen-year fixed mortgage rate is just under three and a half percent.

While adjustable mortgage rates are more than one percent lower than thirty-year fixed mortgage rates, they are only a viable option for those intending to sell their home in the next two to three years. With the housing market in a major slump, the majority of homeowners have no intention of selling their home. As such, it makes sense as to why most prefer the fixed-rate option for their mortgage loan.

More than one million homeowners have opted to refinance this year, and that number will likely go up, particularly in government legislation is passed to allow those with underwater mortgages to refinance. The fifteen-year mortgage loan is becoming increasing popular as a refinance option, as many are opting to reduce the amount of time they have left to pay off their loan while taking advantage of the low interest rates.

While low interest rates on mortgage loans have not yet caused home sales to increase, more and more current homeowners are taking advantage of the opportunity to refinance.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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