HUD Articles

Many financial minds and experts have much to say about inflation and it's effect on real estate.  It would certainly make sense that if the price of everything else is going up, why wouldn't one's most precious asset-their home-also go up in price (if they're selling) and perhaps value as well? 

The answer is, yes, it does seem that inflation is certainly having aome positive effect on home values, which makes it an opportune time to sell.  However there should be some caution when it comes to refinancing your home, especially if you intend to take money out of your home's equity.  Here's a couple of things to keep in mind:

1) Understand the effect that inflation has on interest rates.  If everything else is going up, so are interest rates. Ask yourself: is it really a good time to refinance?  If you're not taking money out of your home but just simply seeking a lower rate (rates may have increased but still may be lower than what you're currently paying), perhaps it makes good sense to do so.  However, consult your tax and financial professionals to help you make the right decision

2) If rates are up, consider the affect that taking money out of your home by refinancing can have on your financial profile.  It may be worth the compromise to take money out of your home if you're going to put it back into your home by way of improvements.  Depending on your current rate, if you can live with a slightly higher rate and payment, this may be ok for some.  Again, talk to your tax and financial professionals before making this decision.

So just because inflation may have a positive affect on your home value, does it make sense to refinance.  As I always say, you're in the driver's seat.  You have to make that decision. Hopefully, these two points will give you some food for thought before 'inflate' your idea of what you're home is really worth, not just in terms of dollars, but it's worth to you.