It is no secret that mortgage interest rates are at historic lows. The COVID-19 pandemic has affected every global market, including the United States mortgage market. While historic lows are currently experienced in interest rates, all signs indicate an imminent increase. If you have been following the news, you know that the Federal Reserve announced last week that they plan to hike interest rates in the next few months and will reduce their purchase of mortgage bonds.
We will explore the benefits of refinancing during historic low mortgage rates, dive into the recent announcement from the Federal Reserve in more detail, and cover general guidelines for refinancing your home to maximize savings. We will also discuss the application process for refinancing with Gustan Cho Associates.
Benefits Of Refinancing During Historic Low Mortgage Rates: Will Rates Go Up?
Last week, the Federal Reserve made several announcements that significantly impacted mortgage interest rates. They revealed plans to raise interest rates in the future and reduce their purchasing of mortgage-backed securities. This news prompted an immediate reaction from investors, causing interest rates to rise slightly.
Does this mean you should refinance your mortgage immediately? Not necessarily. To make the most of the Benefits Of Refinancing During Historic Low Mortgage Rates, it’s important to ensure that the savings from a lower interest rate surpass the costs of refinancing your mortgage loan.
Mortgage interest rates fluctuate for various reasons. Market factors such as 10-year treasury yields, stock market performance, and jobs reports all influence these rates. The Federal Reserve’s substantial investment in mortgage-backed securities (MBS) to bolster the housing market during the COVID-19 pandemic is mainly due to the prevailing historically low rates.
Not long ago, mortgage interest rates were well above 15% as the Federal Reserve worked to curb hyperinflation. Over the past 30 years, we have seen a dramatic decline in interest rates, dropping from over 15% to below 3% on a 30-year fixed mortgage. Understanding these dynamics is essential to fully appreciate the Benefits Of Refinancing During Historic Low Mortgage Rates. Speak With Our Loan Officer for Mortgage Loans
Benefits Of Refinancing During Historic Low Mortgage Rates: Net Tangible Benefit To The Homeowner
Acquiring a loan with a decreased interest rate can be extremely beneficial, providing advantages like lower monthly payments and substantial cutbacks on the overall interest paid throughout the loan’s duration. Additionally, a debt-refinancing option might enable you to repay your mortgage more quickly.
For homeowners with higher property values, refinancing can also provide access to home equity funds, making it a versatile financial tool. These are some of the key Benefits Of Refinancing During Historic Low Mortgage Rates.
However, it’s crucial to consider the various closing costs associated with refinancing, which can be quite substantial. Calculating whether the savings from a lower interest rate will offset the initial costs is important. Additionally, consider the new mortgage terms, especially if you’ve been paying on your current loan for a significant period.
When assessing a new loan, it’s crucial to consider elements like credit ratings, earnings, and property value. These are important considerations to fully understand the Benefits Of Refinancing During Historic Low Mortgage Rates.
The key is calculating “breakeven point”—when your savings outweigh the refinancing costs. Ensure this point aligns with your plans for staying in your home. Refinancing costs can vary widely among lenders, including fees for origination, applications, titles, state and local government, and other third-party services.
Therefore, choosing a highly-skilled mortgage team is essential to guide you through the process and maximize your savings. Understanding these factors will help you fully appreciate the Benefits Of Refinancing During Historic Low Mortgage Rates.
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 alex@gustancho.com. Alex 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. Click here to qualify for mortgage loans
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 Alex Carlucci at 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. Alex Carlucci can be reached directly at 800-900-8569 or via email at alex@gustancho.com.
FAQs: Benefits Of Refinancing During Historic Low Mortgage Rates
- 1. Why are mortgage interest rates currently at historic lows? Mortgage interest rates are at historic lows primarily due to the Federal Reserve investing trillions of dollars into mortgage-backed securities (MBS) to support the housing market during the COVID-19 pandemic. This intervention helped keep rates low to stimulate economic stability.
- 2. Are mortgage interest rates expected to rise soon? Yes, interest rates are expected to increase soon. The Federal Reserve has revealed its intentions to raise interest rates and reduce its acquisition of mortgage-backed securities, resulting in a slight rate increase.
- 3. Should I refinance my mortgage immediately due to rising interest rates? Not necessarily. While rising rates might make refinancing urgent, ensuring that the savings from a lower interest rate outweigh the costs associated with refinancing is important. Evaluate your specific financial situation and long-term plans before making a decision.
- 4. What are the main benefits of refinancing during historic low mortgage rates? The main benefits include lower monthly payments, significant interest savings over the loan term, the possibility of shortening your mortgage term and accessing home equity for other financial needs.
- 5. What costs are associated with refinancing? Refinancing involves several costs, including lender origination fees, application fees, title fees, state and government fees, and other third-party fees. These costs must be weighed against the potential savings to determine if refinancing is beneficial.
- 6. How do I determine if refinancing will save me money? Calculate the break-even point—the time it takes for the savings from lower monthly payments to cover the refinancing costs. Refinancing might be advantageous if you plan to stay in your home beyond this point. Consulting a mortgage advisor can provide a clearer picture based on your circumstances.
- 7. What is the process of refinancing with Gustan Cho Associates? The process involves an initial consultation to discuss options, filling out an online mortgage application, verifying your credit report, agreeing on terms, signing disclosure forms, ordering an appraisal, and finally, closing the refinance transaction. Gustan Cho Associates aims to make this process seamless and maximize your savings.
- 8. What is a cash-out refinance, and how can it be beneficial? A cash-out refinance allows you to use the equity in your home to pay off high-interest debts, such as credit cards. Sure, here it is: Saving money on interest, lowering your monthly payments, and boosting your credit score are all potential benefits.
- 9. How can I ensure that refinancing will provide a net tangible benefit? Make sure that the savings exceed the costs and that the new loan terms match your financial objectives. Gustan Cho Associates will assist you in determining if refinancing will be advantageous for you and your loved ones.
If you have any questions about Benefits Of Refinancing During Historic Low Mortgage Rates or you who need to qualify for loans with a lender with no overlays, please contact us at 800-900-8569. Text us for a faster response. Or email us at alex@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays. Speak With Our Loan Officer for Mortgage Loans
