Net Tangible Benefits By Refinancing By Homeowners

This Article Is About Net Tangible Benefits By Refinancing By Homeowners

Mortgage rates are at a 3-year low. Experts are anticipating mortgage rates to go lower in the coming weeks and months:

• The Federal Reserve Board (The Fed) has recently lowered interest rates by 25 basis points
• This was the first time the Fed has cut interest rates since 2008
• Most borrowers who closed on their home purchase loans last year can get net tangible benefits by refinancing their home loans
• Most borrowers closed their home loans in 2018 with rates in the upper 4.0% to over 5.0%
• Today’s mortgage rates are under 4.0%
• In order to refinance, lenders require borrowers to get net tangible benefits by refinancing

There are several net tangible benefits borrowers can get by refinancing their home loans.

The Most Common Reason Homeowners Refinance Their Home Mortgages

With mortgage rates at historic record lows, the country is going through a refinance boom. After the Federal Reserve Board lowered interest rates to zero percent, mortgage rates started tumbling down to historic record lows. There are many reasons why homeowners may need to refinance. 

• The main reason why homeowners refinance is so they can lower their payments by getting a new mortgage at lower mortgage rates
• It may be due to a divorce
• The ex-spouse may want his or her name off the mortgage note and tile of the property
• It may be due to co-borrowers needing to get out as borrowers
• It may be for needed cash for repairs and/or other family emergencies
• It may be for eliminating FHA MIP and refinancing the loan to a conventional loan
• However, the most common reason homeowners refinance is due to get a better mortgage rate

Lower mortgage rates mean lower monthly payments which mean tens of thousands in savings over the course of the loan term.

The Top Reason To Refinance

The top reason homeowners refinance is to lower their monthly payments.

• Rate and term refinances account for over 50% of the refinance transactions in the United States
• By refinancing a current home loan to a new loan with a lower interest rate, not only does it lower the monthly mortgage payment but homeowners can save tens of thousands of dollars over the course of the loan
• If the borrower has a higher credit score and equity in their home since they first close on their mortgage, this means much lower rates and terms

FHA and VA have the fast track streamline refinance loan programs. Streamlines is a fast track refinance mortgage program where it does not require income docs nor a home appraisal. Most streamlines can be done in two to three weeks.

Net Tangible Benefits: Cash-Out Refinance To Consolidate Debts And Combining Two Mortgages Into One

Mortgage rates are at a 3-year low and seem like it’s going to go lower in the coming weeks and months.

• Home prices have been increasing for the past several years
• Many homeowners who purchased homes in the past few years are getting rewarded with equity in their homes
• Cash-out refinances are becoming increasingly popular. Homeowners with equity can do a cash-out refinance
• The proceeds of a cash-out refinance are non-taxable

Homeowners can borrower against their home equity and do the following:

• Consolidate debts
• Pay off high payment car loans
• Pay off high-interest credit cards
• Consolidate two mortgages into one such as paying off a second mortgage

Lenders do not care what borrowers do with their cash proceeds from a cash-out refinance mortgage.

Other Net Tangible Benefits In Refinancing

Other net tangible benefits in refinancing are the following:

• Refinance FHA Loans to Conventional Mortgages to eliminate the hefty annual FHA MIP for homeowners with at least 20% equity
• Taking out co-borrowers
• Homeowners who are divorcing and needing to take out the ex-spouse from the mortgage note
• Other personal reasons

For more information about this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.