This guide covers refinancing home loans with low rates. Thousands of homeowners were ready to refinance their mortgage loans last year when mortgage rates were in the mid-3.0% % from 2017 through 2020. Rates have skyrocketed to over 7.0%. It is not whether rates will drop but when they will. Maybe mortgage rates will not decrease to 3.0%, but everyone expects rates to drop to the low 4.0% range, making refinancing for home loans ideal.
If homeowners lost out on the chance to refinance last year, now is no better since mortgage rates have increased. If the current mortgage rates make sense and makes a correct, lock mortgage rates in order not to miss out on a chance to take advantage of lower mortgage rates
Unfortunately, many mortgage loan originators did not lock their mortgage rates when rates were at the low 3.0%, and many homeowners did not get a chance to refinance their home loans with low rates. Mortgage rates kept spiking for several years with no signs of retraction or correction. Mortgage rates have spiked up more than 3.25% since May 2017, with no signs of coming back. Mortgage rates have skyrocketed to pass 7.0%. This left many homeowners who wanted to refinance out of the game.
Housing Market Forecast
The stock market went through major fluctuations this week like never before in recent history. Mortgage rates skyrocketed last Wednesday; mortgage rates are now back at nearly 7.25% for 30-year fixed-rate conventional loans. Many homebuyers and homeowners are hoping home loans with low rates will return so they can get mortgage borrowing power. John Strange, a senior loan officer at Gustan Cho Associates, explains the recent reduction of the annual FHA mortgage insurance premium as follows:
FHA annual mortgage insurance premiums is paid for the lifetime of a 30-year fixed-rate FHA loan. no matter what the loan to value is on their FHA loans
With the uncertainty and volatility in the financial markets due to the world crisis that might cause worldwide panic, borrowers can expect mortgage rates to be extremely volatile. Mortgage rates can spike right back up as fast as they dropped. Home buyers and homeowners needing refinancing have a second chance at getting home loans with low rates.
Where Are Conventional Home Loans With Low Rates Today?
Mortgage rates are changing hourly as of last Wednesday. Today’s lowest 30-year fixed conventional mortgage rates hit over 7.00% with 0.375% discount points. 7.25% with no points on a 30-year fixed conventional mortgage loan with no adjustments for a prime conventional mortgage borrower.
A prime borrower is a borrower with at least a 740 credit score, 20% equity, 80% loan to value.. FHA mortgage rates and all other mortgage loan program mortgage rates are at 6.375%. Will rates continue to rise in the coming days, weeks, months?
Nobody has a crystal ball. However, due to this major volatility in the markets, the public distrust of our politicians, and the uncertainty of where our economy is headed, it can affect the real estate and mortgage markets either way. Mortgage rates can continue to skyrocket. Or mortgage rates can slide and be corrected where they need to be.
Excellent Time To Refinance FHA To Conventional Loan and Eliminate FHA MIP
Homeowners currently with an FHA loan may want to consider refinancing an FHA loan into a conventional loan. Doing so can eliminate the costly annual FHA mortgage insurance premium. Borrowers with a 30-year fixed-rate mortgage loan paying a 0.85% mortgage insurance premium on an FHA loan can get it reduced to the new 0.55% mortgage insurance premium on FHA loans.
By refinancing out of the FHA loan into the lower priced annual FHA mortgage insurance premium of 0.55%, homeowners can save a substantial amount of money. Or homeowners with an FHA loan can refinance their FHA into a conventional loan.
If the borrowers have a loan-to-value lower than 80%, homeowners can eliminate mortgage insurance if they have at least 20% equity in a home. Or if homeowners with less than 20% equity can refinance FHA to a conventional loan with no mortgage insurance premium. This is called lender-paid mortgage insurance or LPMI.
California Homeowners Need To Check Their Home Values
Many homeowners in California do not realize that their properties have appreciated drastically. Many California homeowners who purchased their homes several years ago via FHA loans do not realize that their properties have appreciated more than 20% in value.
For borrowers who select to pay private mortgage insurance on a conventional loan with greater than 80%. loan to value, premiums on PMI on conventional loans depends on the borrowers’ credit scores.
Private mortgage insurance automatically cancels once the loan-to-value reaches 78%. California homeowners with an FHA-insured mortgage loan should consult a mortgage loan originator to get a free analysis on refinancing their FHA-insured mortgage loan into a conventional loan and see if there is a net tangible benefit for them. If you want a free analysis and rate, please get in touch with Gustan Cho Associates Mortgage Group at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com.
