Refinance Mortgage Options

Refinance Mortgage Options


This article will discuss the types of refinance mortgage options we offer our borrowers. Gustan Cho Associates is a mortgage broker licensed in 48 states with over 210 wholesale lenders in its lending network. Think refinance mortgage options are dead? Think again! Gustan Cho Associates can price out a mortgage loan program with the best terms and rates for our borrowers. Why not analyze if you would get a net tangible benefit with refinancing your home loan?

Smart Homebuyers Seize Opportunity in Rising Rates

The Power of Refinancing: There are no guarantees that today’s high rates will ever be lower again, and interest rates may continue to rise. Many experts expect the rates to settle at 9%. If you are waiting for home interest rates to lower, you may lose your opportunity to purchase a home.

The real estate market has been riding a rollercoaster over the past few years. With record-high prices skyrocketing, mortgage interest rates reached their highest in two decades.

This unprecedented situation has prompted mortgage lenders to devise innovative solutions to entice prospective homebuyers to act before rates increase and secure their piece of the American dream. Among these solutions is a unique program that enables buyers to purchase property at current market rates, with the promise of refinancing at a lower rate in the future, should rates lower. Savvy Buyers/Borrowers and innovative Loan officers work together to provide solutions.

The Current Real Estate Landscape

The year 2021 saw a remarkable surge in the housing market, with home prices soaring at an astonishing annual rate of nearly 20%. This meteoric rise created a feeding frenzy among buyers, driving up demand and increasing prices. However, 2022 brought a new challenge as mortgage interest rates soared, causing the once-booming market to contract. In 2023, rates have surpassed 7% for a 30-year term. This sharp increase in interest rates naturally led to higher monthly mortgage payments, with the national median payment hitting an all-time high of $2,537 in August.

What Is The Advantage of Refinancing?

Mortgage Companies such as Gustan Cho at Gustancho.com are committed to being the cutting edge, providing their borrowers purchasing now and discounted typical closing costs in the future.  This article explores this groundbreaking initiative and its potential benefits for savvy homebuyers.

Refinancing today may allow homeowners to lower their monthly payments. Homeowners can save more money over the life of their loan.

There are other reasons homeowners need to refinance their current mortgages. It may be due to them getting a divorce and the need to get the ex-spouse off the note. Or it may be that non-occupant co-borrowers may need to be taken out. Many homeowners purchased their homes via seller financing, and their balloon term may be coming up. Others purchase their home with hard money or private loans and must repay the short-term loan. Whatever the reason, homeowners normally refinance their home loans because of net tangible benefits to them.

Which Refinance Mortgage Option is Right For You?

What Is The Advantage of Refinancing One frequently asked question from our clients is, what are my refinance mortgage options and benefits for me? A lower mortgage rate will save homeowners tens of thousands of dollars over the loan term. A lower interest rate on your mortgage means a lower monthly payment with savings on interest expenses. Refinance mortgages may benefit the homeowner with a shorter payoff term. There are other benefits for the borrower for refinancing. The homeowner may need to tap into their home equity to do a cash-out refinance for repairs or other reasons.

How To Get The Best Mortgage Refinance Rates

The lender cannot do the mortgage on refinance mortgages if the loan officer does not see a net tangible benefit for the borrower. The mortgage business is extremely regulated. By law, lenders cannot churn borrowers and recommend refinance mortgage options where there is no net tangible benefit to borrowers. Your credit may have improved since you took out your current mortgage. You could lower your monthly payments, allowing yourself more spending money each month. You can consolidate your debt by refinancing. You could make one low monthly payment instead of numerous payments.

FHA Streamline Refinance

What are the updates on improving refinancing by FHAHomeowners currently with an FHA loan can do an FHA Streamline Refinance where they do not have to provide income documentation, no appraisal, and no credit scores are required. If homeowners have been timely with mortgage payments in the past 12 months, their FHA Loan can qualify. It is a fast-track refinance mortgage program offered by HUD. FHA Streamline Refinance with no closing costs, and depending on what mortgage rate borrowers are paying, homeowners can save tens of thousands of dollars over their term.

Update on FHA Annual Mortgage Insurance Premium

The Federal Housing Administration lowered the annual FHA Mortgage Insurance Premium from 0.85% to 0.55%. Homeowners with larger balance FHA loans can save with lower FHA mortgage rates and save 0.35% in reducing their FHA annual mortgage insurance premium. This is a huge saving. Please contact Gustan Cho Associates at 800-900-8569 or email Gustan Cho Associates at gcho@gustancho.com.

Refinance Mortgages From FHA to Conventional To Eliminate FHA MIP

Refinance FHA Loan To A Conventional LoanHome prices have skyrocketed since this mortgage blog article was initially written and published. Many parts of this country, such as California, Florida, Georgia, Michigan, Nevada, Texas, and Illinois, have seen double-digit annual increases in their property values.

Homeowners in an area where their home is appreciated should consult with us and see if we can refinance an FHA loan to a conventional loan. See if we can eliminate the FHA mortgage insurance premium.

Many homeowners in California are surprisingly shocked to see that their homes have appreciated 20% or more in the past couple of years. Gustan Cho and his associates have done numerous refinance mortgage loans where homeowners refinance their FHA loans to conventional loans. Due to the appreciation, we are saving homeowners thousands by having the FHA mortgage insurance premium wiped off.

Cash-Out Refinance Mortgage Options 

Homeowners with home equity can do a cash-out refinance to pay off their original home loan and get a larger mortgage loan. They can use the cash proceeds to pay off old debt, consolidate debt, or for any reason, such as investments.  HUD allows up to 80% loan-to-value on a cash-out mortgage loan,, and a conventional mortgage loan allows up to 80% loan-to-value. Department of Veterans Affairs allows up to 100% LTV cash-out refinance.

The Impact on Homebuyers

As interest rates escalated, many prospective homebuyers hesitated, electing to wait on the sidelines, hoping that rates would eventually recede. This collective pause in buying activity significantly impacted the housing market, resulting in a staggering 33% drop in existing home sales in August compared to the previous year. In response to this changing landscape, mortgage lenders recognized the need for a new approach to reignite homebuyer interest and activity. Thus, they introduced innovative programs to provide financial incentives for those willing to plunge into homeownership, even in a high-rate environment.

The Promise of Refinancing

One such program gaining traction in the mortgage industry allows eligible borrowers to purchase a home at current market rates and refinance when interest rates decrease, all without incurring the standard closing costs, ranging from 2% to 5% of the loan amount. This initiative aims to provide prospective buyers with the flexibility to secure a property now and then optimize their financing terms in the future when rates become more favorable, should interest rates lower.

Key Considerations for Homebuyers

While securing and refinancing a home at a lower rate without typical costs is undoubtedly enticing, potential homebuyers must exercise their due diligence. The terms and conditions of these programs can vary significantly from lender to lender, making careful research and consideration of all available options imperative. Here are some key takeaways for prospective homebuyers. Before starting this journey, assess your financial readiness. Ensure you have a stable income and understand your long-term financial goals clearly.

Understand the Program

Thoroughly comprehend the specifics of the program offered by your chosen lender. Determine the eligibility criteria, the time frame for potential refinancing, and any associated fees or conditions.

Seek Expert Advice on Refinance Mortgage Options

Consider consulting with a mortgage advisor or financial expert to understand better how the program fits into your overall financial strategy.

Plan for the Future

While current interest rates may be higher than recently, the real estate market is cyclical. The high rates today can go higher and never be this low again. There may never be a lower rate to refinance. And so, while you wait for the rates to lower, please realize there’s no guarantee that these rates will ever be lower than what they are today. Ensure that your decision aligns with your long-term plans and financial stability.

Conclusion

In a real estate market marked by rising interest rates, prospective homebuyers can seize the moment through innovative programs that promise future refinancing without the burden of traditional closing costs. As with any significant financial decision, careful consideration and research are paramount. By understanding the intricacies of these programs and evaluating their financial readiness, savvy homebuyers can make informed decisions that position them for success in the evolving real estate landscape. Whether you are waiting for Residential or Commercial loan rates to drop, the actual event for that to occur is not known. It may never happen.