This article is about the benefits of refinancing during historic low mortgages rates

It is no secret that mortgage interest rates are at historic lows. The COVID-19 coronavirus outbreak has sent ripples through every global market including the United States mortgage market. Interest rates are currently at historic lows, but all indications look like they are going to rise, and rise very soon. If you have been paying attention to the news, you know the Federal Reserve made an announcement last week stating they plan to hike interest rates in the next few months and will ease up on buying mortgage bonds. In this blog, we will dive into the recent announcement from the Federal Reserve in more detail. We will go over general rules for refinancing your house to save the maximum amount of money. We will also discuss how to apply for a refinance transaction with Gustan Cho Associates.

In this article, we will cover the benefits of refinancing during historic low mortgage rates.

Benefits Of Refinancing During Historic Low Mortgage Rates: Will Rates Go Up?

Last week the Federal Reserve made numerous announcements that had a direct impact on mortgage interest rates. The Fed announced that they do plan to raise interest rates in the future and slow down their purchasing of mortgage-backed securities. Immediately investors reacted ticking interest rates up slightly. Does this mean you should refinance your mortgage immediately? The short answer is no, we want to make sure that your savings will outweigh the costs associated with refinancing your mortgage loan.

Mortgage interest rates can go up or down for many different reasons. If you follow the market closely, you will know the 10-year treasury yields, stock market, and jobs reports all impact mortgage interest rates. The main reason interest rates are at historic lows is due to the Federal Reserve investing TRILLIONS of dollars into MBS or mortgage-backed securities to keep the housing market strong during the COVID-19 coronavirus outbreak. It wasn’t long ago that mortgage interest rates were well above 15%, as the Federal Reserve was attempting to ease hyperinflation. In the past 30 years we have seen interest rates drop from above 15% all the way below 3% on a 30 year fixed mortgage.

Benefits Of Refinancing During Historic Low Mortgage Rates: Net Tangible Benefit To The Homeowner

As a general rule of thumb, if you plan on staying in your home for at least 3 to 5 years, and you can reduce your interest rate by half a percent or more, it typically makes sense to refinance your current mortgage. Our team needs to verify the costs of refinancing do not outweigh the savings of your new mortgage. There is a “breakeven point” where you start to save money. We need to make sure that the breakeven point will occur while you still plan to live in the home. The cost of refinancing can vary for each lender. There are certain costs such as lender origination, application fees, title fees, local state, and government fees, and other third-party fees which can affect your breakeven point. You need to pick a highly-skilled mortgage team who can educate you on your savings and guide you through the process. 

Skyrocketing Home Values

A cash-out refinance can be an excellent time to hit the reset button on your financial obligations. Utilizing the equity in your home to pay off high-interest credit cards can be extremely beneficial. You can save hundreds and even thousands of dollars on a monthly basis depending on your current consumer debts, not to mention increase your credit score by paying off revolving accounts. If you are interested in utilizing the equity in your home to rearrange your consumer debt into one easy-to-make monthly payment, please reach out to our team today. Our loan officers have been trained to maximize your savings! 

How do you know if you should hold off on refinancing? The first step is to simply call Gustan Cho Associates at (800) 900-8569 or send an email to mike@gustancho.com. Mike will go over your current mortgage and your refinancing options. If you plan on staying in the home for a while and your breakeven point makes sense, you will then be sent custom refinance options. Depending on your current interest rate, it may not make sense to refinance your home. The good news is the mortgage agencies have strict requirements against a malicious practice called “churning”. Churning is a practice where lenders continually refinance a borrower’s property. This will protect you from paying costs that do not benefit your overall financial picture. Your refinance transaction must pass what is called “net tangible benefit”. Please reach out to our team to make sure that the savings or a refinance will benefit you and your family.

Refinance Mortgage Process At Gustan Cho Associates

Refinancing with Gustan Cho Associates is a simple and seamless process. Our highly skilled mortgage team are experts in refinance transactions. First, you will call Mike Gracz on (800) 900-8569 to discuss your refinancing options. It is important to choose a highly educated loan officer to save you the maximum amount of money, so you are not paying refinance costs again in the future. There are numerous ways to put the equity in your home to work for you and we will come up with the best plan of attack. After your initial refinancing consultation, you will fill out an online mortgage application. This application will allow our team to verify your credit report and send refinance options to you. Once you and your loan officer agree on refinancing terms, you will sign online disclosure forms. From there, your mortgage team will order the appraisal which is typically the only out-of-pocket expense for you during the refinance transaction. While waiting for the appraisal, we will have your file sent to processing and underwriting teams accordingly. Once we get the appraisal back, we will make sure your interest rate is locked in and get you to the closing table.

After reading this article we hope you understand that the time to act is now. We would hate to see our borrowers wait to pull the trigger to pay more interest in the future. Interest rates are at historic lows and it is now time to take advantage. Please reach out to our team with any refinance-related questions. Mike Gracz can be reached directly at (800) 900-8569 or via email at mike@gustancho.com.