Refinance Loans Surge in Popularity
Low mortgage rates coming as a result of investor reactions to coronavirus news has driven so many people (including some in the banking industry themselves if some reports are to be believed) to look into their refinance loan options.
What do you need to know about refinancing your home loan in an extremely volatile interest rate environment?
If You Are Ready to Refinance, Do So
Some like to gamble, holding off on committing to a refinance loan or a purchase loan until rates go as low as possible. But in the current interest rate environment, there is no way to predict whether rates will stay as low as they are at the time of this writing, or for how long.
Tomorrow could bring markedly different activity in the markets and for rates. There is no reliable way to predict what comes next.
If You Are NOT Ready To Refinance, Don’t Hurry
Yes, rates are lower than ever. No, people who wait won’t get a loan at the lowest possible rate. But if you have late or missed payments on your record in the last 12 months, or if you are still working on saving up for closing costs and other expenses, does hurrying help?
Not if hurrying means applying before your credit is ready for the lender to review. If you need to wait to apply for a loan in order to get a better shot at loan approval, applying with today’s low mortgage rates won’t do anything to get you closer to being viewed as a good credit risk.
If your readiness for the loan has more to do with having enough money to put toward closing costs instead of financing them (not all closing costs can be financed), have a conversation with your lender about the cost of the loan, and how much the loan will cost if you finance certain closing costs instead.
Does the low interest rate offset your financing the Up Front Mortgage Insurance Premium on a purchase loan, for example?
For refinance loans, you won’t need a down payment, but the closing costs issue is an important one to contemplate.
Talk to a loan officer today about your circumstances, the ability to get a mortgage rate lock commitment, and what you should do to refinance your home loan when the time is right.
Get Your Questions Ready for Your Loan Officer
The Last Part of the Transaction Is the Mortgage Closing
Know What You Can Borrow With Prequalification
Do you know what's on your credit report?
Learn what your score means.