Right now is the best time in history to refinance for many homeowners…but if they wait, they’re sure to lose out.

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A recent report published by the Washington Post revealed that 20 percent of American households with mortgages – about one million of them – are eligible and would benefit from refinancing in today’s low rate environment, but have failed to do so. The failure of homeowners to take advantage of a potential savings via refinancing – an estimated $45,000 average savings over the life of each loan – is something that’s leaving economists scratching their heads.

But there’s one thing for sure – if homeowners continue to hesitate to refinance through the summer of 2015, they’ll be missing out on one of the golden opportunities in the history of mortgages, and potentially costing their families a bundle. That’s because the fed is sure to raise the federal funds rate when they meet next this summer, the first of an expected incremental of the fed funds rate – which is mirrored by the prime rate and therefore many mortgage products.

That’s not bad news at all because since 2008, we’ve benefited from a historically low 0-0.25 percent fed funds rate to stimulate the economy. But now, with optimistic jobs numbers, a hot stock market, and a healthy real estate market, the fed will start a gradual rate increase over the next year to achieve normalized levels and temper inflation.

So what does it all mean?  Refinance now if you want to save money, before it’s too late. 

At the very least, talk to your mortgage professional about a potential refinance, because you don’t have to do anything if it doesn’t make financial sense and save you money.

Of course the ability to get approved for a money-saving refinance is not just about low interest rates, as rates were exceptionally low a few years ago, yet fewer people had the equity or income to qualify.

Here are five more factors that make this the perfect time to explore a refinance:

1.  We’ve made great gains in equity.
Mortgage rates were at an all-time low in November of 2012, when they averaged 3.31% on a 30-year, according to Freddie Mac data. While many people saved money by refinancing at that time, the majority of homeowners ran into a barrier that kept them from taking advantage – home equity. Rates were extremely low but the country was still crawling out of a bottoming of home values after the 2008 market crash. But even since 2012 we’ve gained significant gains in property value, particularly in the Sacramento area where appreciation neared 10% last year. We may never see rates as low as November 2012 again, but they’ve come close so far in 2015 – and this time, we’ll have enough equity to cash in.

2.  Lending products are back.
Banks and lenders were ultra conservative with what products they offered post-real estate bubble, eliminating the alternative and subprime products that they felt got us in a mess in the first place. But now as the market has picked up steam and we’ve enjoyed a healthy equalization, banks are getting back into the business of offering common-sense loan products. Even Fannie and Freddie are rolling out expanded loan guidelines that help people with low money down, lower credit scores, or are self-employed. That’s great news for homebuyers and people who want to refinance this summer.

3.  Low rates are still here – but not for long.
Throughout most of 2014 we’ve enjoyed historically low mortgage interest rates. But rates are expected to move after the fed starts raising rates in June and as we flip the pages of 2015’s calendar. But for now, there is still a small window for homeowners to refinance their mortgages and save money.

4.  Low costs to refinance mean quick BEP.
Thanks to increased competition, transparency, and regulation in the industry, refinancing a home now costs less than ever. Refinancing your home is all about long term savings, and to achieve that you need to first reach your Break Even Point, or BEP, where the savings pass the cost of the loan. If you refinance early in 2015, you’ll reach and surpass that BEP quickly, saving you money.

5.  15-year rates are low.
Whenever the news media discusses mortgage interest rates, they use the barometer rates for 30-year conventional loans. While 30-year rates are fantastic, we’ve seen a rise in clients who achieve even lower rates and far more savings by refinancing into 15-year conventional loans. This allows them to pay off their mortgage completely in half the time at a huge total cost savings, as they pay far less mortgage interest and 15-year rates are lower than ever.

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For more questions about making sure your credit score is ready for a refinance, contact us for a complimentary consultation. And get in touch with your mortgage professional ASAP so you don’t miss out!

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