This ARTICLE On The 2020 Refinance Boom And Taking Advantage Of Low Mortgage Rates Was PUBLISHED On March 8th, 2020
The stock market selloff two weeks ago dropped the Dow Jones Industrial Average by over 3,500.
- This is a 13% market correction which is correction territory
- Last week, the equity markets were extremely volatile
- One day the Dow skyrocketed over 1,000 points and the next day it plummets 1,000 points
- On Friday, the Dow closed 253 points despite stellar job reports numbers
- Market volatility and uncertainty sent mortgage rates substantially lower
- Mortgage rates are volatile and will be until the coronavirus outbreak stabilizes
- 2020 mortgage interest rates forecast is expected for mortgage rates to hit historic lows
- What this means is a surge in refinance mortgage applications
- There was a 30% increase of mortgage loan applications last week, surpassing the 26% increase the previous week
In this article, we will discuss and cover the 2020 Refinance Boom And Taking Advantage Of Low Mortgage Rates.
2020 Refinance Boom Triggered By The Coronavirus Outbreak
The 2020 housing market forecast was strong.
- There is more demand for homes than inventory
- Both HUD and the FHFA have increased FHA and Conventional Loan Limits for the past four years due to escalating home prices
- 2020 FHA loan limits are capped at $336,400
- 2020 Conforming Loan Limits is now at $510,400
- The VA no longer has a maximum loan limit on VA loans
- Once the coronavirus outbreak hit the news, the stock markets entered into a major market selloff and into correction territory
- In general, when stocks drop, the 10-year Treasury drops
- When the 10-year Treasury yield drops, mortgage rates drop as well
- Yields on the 10-year U.S. Treasuries plummeted under 1.0% plummeting mortgage rates to a near-historic low
- 2020 Refinance Boom started. Lenders are seeing more applications than ever before
Both purchase and refinance mortgage applications are skyrocketing. 2020 Refinance Boom is in full gear ahead which experts believe this year will have the best numbers in mortgage application volume.
2020 Refinance Boom Due To Historic Low Mortgage Rates
When mortgage rates are quoted in the news, they are par rates.
- Mortgage rates quoted are rates for prime borrowers on 30-year fixed-rate conforming mortgages
- A prime borrower is a borrower who has 740 FICO scores with a 20% down payment and is purchasing and/or refinancing a single-family home
- Lenders base mortgage rates on the level of risks they take
- The lower the borrower’s credit scores, the higher the risk
- The higher the borrower’s debt to income ratios, the higher the risk the higher the rates
- Lower loan to value means higher risk for the lender thus higher mortgage rates
- Not everyone will get the same rates
- Mortgage rates will be determined with pricing adjustments that are imposed by lenders due to risk factors
In order to trigger a refinance application, borrowers need to meet net tangible benefit guidelines.
Taking Advantage Of The 2020 Refinance Boom For Homeowners
The ultimate American Dream is the dream of homeownership for most Americans. There are many types of refinancing mortgages. There are many reasons to refinance a mortgage as well. The majority of homeowners refinance to save money and reduce their monthly mortgage payments. Others may need to take out a co-borrower due to a divorce and/or take out a non-occupant co-borrower. Michael Gracz of Gustan Cho Associates is the company’s top producer in refinancing mortgages. Mike explains the refinance mortgage process and the net tangible benefits:
As homeowners know, a house isn’t simply the place where you live- it’s an investment. Over the years, you’ll be faced with important decisions regarding maintenance, insurance, repairs, and more of your house. At some point during your journey of homeownership, one of those decisions may be whether or not to refinance. Refinancing is essentially the act of replacing your existing loan with a new one. When you refinance, you get a new loan with a new interest rate, and usually a new term. This is an attractive option for a variety of reasons. If you’re a first-time homeowner, refinancing can allow you to get rid of mortgage insurance you purchased as a requirement of that loan. Doing so can free up funds that you can use for other necessities or savings. You might also refinance in order to get cash in hand or to cut down the number of mortgage payments. Perhaps the most well-known reason to refinance is to get a lower interest rate, which will save you money on monthly payments. Right now interest rates are at historic lows; surprisingly, it’s not uncommon for people to overlook this opportunity, often because they think it’s a waste of time. Rather than assume it won’t work for you, why not explore your options?
Many homeowners procrastinate when it comes to applying for a mortgage. Homeowners need to think twice about procrastinating. Refinancing during times of low rates may save borrowers tens of thousands of dollars over the course of the loan. There are VA and FHA streamline refinances where no appraisal and no income documentation is required. VA and FHA streamlines require limited documentation and most close in 21-days or less.
Time To Consider Refinancing Home Loan
There are many reasons to refinance for homeowners. Here are typical reasons homeowners should refinance and take advantage of falling mortgage rates:
- Homeowners who are divorcing may want to take their ex-spouses off the current loan
- Homeowners who needed non-occupant co-borrowers may want to take them off the mortgage
- Homeowners who had their properties appreciate in value may want to refinance an FHA loan into a conventional mortgage
- Those with high-interest non-QM mortgages may want to refinance into a government and/or conventional loan
- Homeowners whose homes have appreciated and have equity may want to do a cash-out refinance
- Most homeowners refinance due to take advantage of lower rates
- Those with adjustable-rate mortgages may want to refinance into a 30-year fixed-rate mortgage and lock today’s low mortgage rates for the term of the loan
Regardless of the reason, taking advantage of today’s low mortgage rates will save homeowners tens of thousands of dollars over the course of the mortgage and lower their monthly payments.
March 8, 2020 - 4 min read