Top Mortgage Question Answered: Is It Too Late To Refinance?


Yes sir. Thanks for reading. Seriously, mortgage rates will remain very low for now, even though experts don’t expect it to last much longer. A recent survey by Bankrate found that many homeowners not refinancedalthough it could save them money. Black Knight found on his own behalf opinion poll that nearly 20 million Americans missed the opportunity.

When you have a mortgage and you don’t refinanced With interest rates falling to historically low levels due to the coronavirus pandemic, you should seriously consider revising your loan before interest rates rise again. Otherwise, you could miss the window of opportunity for savings.

If this applies to you, there are a few important things to keep in mind when refinancing in the current mortgage market.

These low prices don’t last forever

Although 2021 started with rates near 2020 records, most mortgage industry observers believe interest will rise again soon.

“We’ll see a lot stimulus from Washington, ”said Jim Sahnger, mortgage planner at C2 Financial Corporation in Jupiter, Florida. “It’s going to be hard to keep interest rates up to date.”

In 2019, mortgage rates were mostly in the 4 percent range, but in 2020 they fell into the 3 and even 2 ranges. That made mortgage refinancing an attractive option for many borrowers – even those who standards mortgages with very low interest rates through 2019.

As prices rise again Refinancing makes financial sense for fewer people. For now, however, you can probably save if you opened your current mortgage before 2020.

It is especially important to jump on a refi now if your mortgage has an interest rate of 4.

“It’s a big deal when it comes to people who only benefit from rates below 3,” Sahnger said. For these people it is “a good time to take advantage of our current situation.”

Lenders have largely worked off their arrears

When interest rates took a nosedive at the beginning of the pandemic, many mortgage lenders saw a spate of refinances Applications roll in what has tied up their processing capabilities and delayed completion for many borrowers.

Mortgage applications typically have a 30-day lockout, but since some lenders take 60 days or more to close during the early onslaught, these delays quickly became costly to borrowers. Many ended up paying additional fees to extend their lockdown or eventually settle for a different interest rate than the one originally advertised.

Now, Sahnger said, the lenders have largely reduced most of those arrears, making the closure more efficient again. The result is less risk and lower costs for applicants.

Even so, he added, it’s important to speak to your lender about how long your application is likely to take to process.

“You just have to be realistic about how long you will put your loan on hold,” Sahnger said.

You can avoid further delays by getting any paperwork you may need in advance and being honest with your lender throughout the processing time about changes to your financial situation that may not already be on your credit report . This includes notifying them of new credit, deferral of your mortgage, or changes in your employment status that could block or even thwart your application.

Should someone skip the refi?

While those all-time low rates make refinancing a wise decision for many mortgage borrowers, it may not be right for everyone down the line.

“One of the most important things to look at is how long you are likely to be staying in the property or mortgage,” Sahnger said. “If you think that you are unlikely to be on the mortgage or property for more than three years, it may not make sense to do so.”

In other words, if you only have a few more years to repay your mortgage or you plan to move in the foreseeable future, refinancing may not make sense for you because you have yours Refi closing costs before you are ready to end the loan.

On the other hand, every borrower’s situation is slightly different, so it is important to calculate all costs and savings yourself in order to determine your own break-even schedule.

“I’ve had situations where people with mortgage rates are in the top three, low four, sometimes up to five percent, and sometimes they have paid for themselves in less than 12 months,” Sahnger said. For borrowers like that, refinancing can also be useful if you plan to move or pay off your loan a few years later.

“You have to look at the total cost,” he said.

Don’t just look at your interest savings, either. The cost of your new mortgage includes any fees that will come up at the time of closing – usually 2 to 6 percent of the total value of your loan – and these fees will also affect your break-even date.

Bottom line

Now is a good time for many people to find refinance, and the window to savings may be closing for many borrowers.

If you haven’t refinanced in the last year, it’s worth looking around to see how much you can save. Calculate all of your costs and think about how much you need to save to make a refi worth it. And as always, be sure to shop around and compare multiple loan offers before starting the application process. Otherwise, you could leave money on the table.

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