Come On In, the Water’s Fine – for Refinancing!
If you don’t make a habit of following financial news you may have missed some significant information last week that could affect millions of homeowners. Despite the strong economy and good job numbers, a volatile stock market and investor concerns continue to push mortgage rates down at a record pace.
Home prices remain out of reach for many new buyers, but this rate reduction is excellent news for current homeowners who are thinking about refinancing. In fact, the pool of candidates who could see their rates drop by as much as 75 basis points if they refinance has increased to approximately 5.9 million borrowers*.
This number of eligible homeowners is the largest in almost three years which comes to a total potential monthly savings of $1.6 billion – or around $271 each month, per candidate.
Is this good news for you?
If you’re included in the pool of new candidates that qualify to take advantage of these dropping rates, there are several primary reasons and benefits homeowners consider when pursuing a new loan:
Consolidating debt into one low fixed interest rate loan and therefore reducing the total monthly mortgage payment.
Taking cash out of the increasing home equity for remodeling, a major purchase or maybe a rainy day.
Adjusting the term of the loan for various reasons, such as paying it off faster, removing someone from an existing mortgage, or reducing a high monthly payment.
Whatever the objective, mortgage refinancing can potentially lower interest rates and monthly payments resulting in significant savings.
However, it’s important to know your options as well as the pros and cons before taking advantage of these all-time low mortgage rates.
There can be substantial fees and closing costs when refinancing so buyers should plan on staying in the home long enough to recoup those costs. If reducing monthly payments add years to the loan, make sure you don’t end up paying more in the long run. Brand new homeowners with government funded loans wouldn’t qualify for refinancing until six months after purchase.
While making these calculations it’s also essential to look at the long-term benefits. If you’re taking cash out – which makes up 95% of refinancers’ objectives – in order to make home improvements like a kitchen remodel, then you’re ultimately adding value that you’ll most likely recoup upon selling. Or refi cash going towards personal debt consolidation can potentially save you thousands in compounded interest and excessive fees on credit cards and other loans.
Cool, so now what?
Although we typically refrain from using water metaphors when discussing mortgages, if you’re included in this growing pool of qualified homeowners then you may want to dip an inquisitive toe into the refinance process. And our knowledgeable team at EnTrust Funding (ETF) can help navigate these waters.
We offer an array of loans, including the standard conventional, jumbo, FHA, VA and reverse mortgages and USDA products, as well as a wide variety of specialty loan programs, including products tailored to those with low credit scores.
Refinancing rates change daily and can be unpredictable, but with these current historically low reductions, it makes sense to explore your options and lock in a rate that works for you and your family. We at #entrustfunding strive to take the guesswork out of the refi process and provide excellence in all aspects of your loan business.
We understand that a mortgage is not just a transaction but rather it is a path to your #americandream.
* Statistics according to CNBC.com and Black Knight, a mortgage software and analytics company.