May 3, 2022 | Real Estate
As interest rates fluctuate, you might think about refinancing your mortgage. This is the cost of taking out a new home loan to replace the one you currently have. If you get a significantly lower interest rate, you could save tens of thousands of dollars over the life of the mortgage. On the other hand, you need to think about potential expenses you might incur during the refinancing process. Because you are taking out another home loan, you may need to pay closing costs a second time. What are some of the most common expenses you might have to pay?
The Mortgage Application Fee
One of the most common expenses is the mortgage application fee. Essentially, this is a fee that the lender will charge for opening up a new application on your behalf. The fee can vary significantly depending on the lender you use, but it is usually a few hundred dollars.
A Home Appraisal
When you took out your first mortgage, the lender probably required you to get your home appraised. The lender wants to make sure they are not financing a home that is not worth as much as its price tag. You still need to get your home appraised again if you decide to refinance your mortgage. The lender wants to make sure they understand how much the house is worth before they give you a loan for it. A typical home appraisal is also a few hundred dollars.
Title Search And Title Insurance
The lender might also require a title search and title insurance. This is important for making sure you protect yourself in the event someone else still holds the title to your house. A title search is usually a few hundred dollars, and title insurance could be $1,000 or more.
Loan Origination Fee
Most lenders charge a loan origination fee that is approximately one percent of the value of the loan. Again, this can vary from lender to lender as well.
Understand These Fees
There are lots of potential fees that a lender might tack on. Fortunately, you do not necessarily need to pay for all of them. Always ask the lender whether they might be willing to waive some of these fees to make the cost less expensive.
Mar 29, 2022 | Homeowner Tips
You might have heard that more people are refinancing these days. During the refinancing process, you essentially take your current home loan and replace it with a different one. You can reduce your mortgage payments, shorten the life of your loan, or withdraw cash you can use for other purposes. What are a few of the signs that indicate you should consider refinancing?
You Can Secure A Lower Interest Rate
If you think you can secure a lower interest rate on your mortgage, it might be time to refinance. There are a number of reasons why you might be able to get a lower interest rate on your home loan. Your credit score may have improved, you may have paid off some of your other loans (which will improve your debt to income ratio), or the average home loan interest rate may have dropped. If you can get a lower interest rate on your home loan, you may want to refinance and save money.
Your Income Has Increased Significantly
If your income has gone up significantly since you purchased your house, you might want to pay off your house more quickly. Therefore, you might want to refinance and use larger payments to pay down your home loan more quickly. The bank might also give you better terms if you are willing to make larger payments.
You Are Concerned About Your ARM Mortgage
If you have an adjustable-rate mortgage (ARM), you might be concerned that the interest rate on that mortgage could go up. Therefore, you can refinance your home and convert your ARM mortgage to a fixed-rate mortgage. If you can lock in an interest rate with a fixed-rate mortgage, you do not have to worry about your interest rate increasing in the future. This could save you thousands of dollars over the life of the loan.
Consider Refinancing Your Home
These are just a few of the signs that you should consider refinancing your mortgage. Everyone is in a slightly different financial situation, so you should work with a professional who can figure out if this is right for you. That way, you can secure the best possible terms for your home loan.
Nov 30, 2021 | Real Estate Tips
There are many people who are thinking about refinancing their homes. For example, some people may be interested in reducing their monthly payments, while other people may be interested in tapping into the value of the home to fund a home improvement project. What is the relationship between property values and refinancing? There are several important points to keep in mind.
Property Values Tend To Rise
First, it is important for homeowners to understand that property values tend to rise during the life of a mortgage. For example, someone may purchase a home valued at $250,000. Then, fifteen years later, the home might be valued at $350,000. This might mean that homeowners have access to an extra $100,000 in equity. They might use some of this money to put towards a new home when they sell their current home. Or, they might refinance their home and access that equity to complete a home improvement project.
Monthly Payments Might Go Up
If homeowners decide to refinance their houses and take all of the equity out of the home, they might be starting their 30-year mortgage over again. Then, because the property is worth more money, they may end up with a higher monthly payment. That is why homeowners need to work with a professional who can help them figure out how the refinancing process may impact their finances in the future.
Why Property Values May Rise
There are several reasons why property values may go up. First, there might not be enough homes in the local area. Therefore, the ones that are available might be worth more money. The popularity of a specific location might increase as well. There might be a new company moving to the area with attractive job opportunities. Finally, home improvements might also increase the value of the property.
Why Refinancing Might Make Sense
There are several reasons why it might be a good idea to refinance a home. First, homeowners might use some of the equity to pay off existing debt, such as medical bills. Some homeowners like to refinance their homes to reduce their monthly payments with a lower interest rate. Finally, there are homeowners who refinance to complete home renovation projects.
Jun 24, 2021 | Real Estate
There are a lot of people who are wondering if now is the right time to move or refinance their current home loan. With interest rates still favorable, a lot of homeowners have the potential to save a lot of money if they are able to secure a home loan with a lower interest rate. There are two ways homeowners can secure a home loan with a lower interest rate. The first is to refinance. The second is to move. Which option is better? There are a few key points to keep in mind.
Taking A Closer Look At Refinancing
There are a lot of homeowners who have an abundance of equity currently built up in their homes, making this a great time to refinance. With a refinance, there are multiple options available. Some homeowners might refinance to access the equity in their homes, allowing them to complete a project. Some homeowners might refinance in an effort to pay off their home loan sooner. If homeowners are trying to access more equity, or are trying to shorten the term of the loan, then refinancing might be the smart move.
Looking At The Option Of Moving
The other option is to get a new home loan entirely by moving. This is an attractive option for homeowners who might have a dream house they would like to move to. In particular, any homeowner who currently has a home loan with a high interest rate should consider moving into their dream home now. Because mortgage rates are low right now, this is a chance for homeowners to move into a larger house while keeping their mortgage payments the same or less by obtaining a lower interest rate.
Every Situation Is Different
In the end, every situation is different. Because interest rates right now are so low, now could be the time for homeowners to consider moving or refinancing. Switching to a home loan with a lower interest rate could save tens of thousands of dollars over the life of the loan. Anyone with questions or concerns should reach out to a professional for help.
Apr 20, 2021 | Real Estate
In 2019 many people expected that the home lending market was going to eventually grow more expensive. Instead, 2020 spent its entire 12 months becoming more affordable when it came to financing a personal home, moving in the opposite direction of what was expected. Not only did the loan cost drop break previous records, but it also presented an additional opportunity for homeowners to reposition and take advantage of lower borrowing costs again.
The General Advantages of a Home Loan Refinance
The refinancing of a mortgage has traditionally been three-fold. First, it is a chance to renegotiate the loan on a home purchase for a lower interest rate, which means more of the borrower’s payment goes to the loan and less to an interest charge. Second, it gives people an option to change the interest rate charged to a shorter payment period, which can also save considerable money. A borrower will pay dozens of thousands less on a 15-year loan versus a 30-year mortgage. Finally, refinancing allows a borrower to tap into home equity to use that cash value to consolidate debt, pay for other big costs, or make renovations to the home without paying out of pocket for them.
Why 2021 Provides a Good Window
By the time 2020 ended, mortgage rates overall were running at all time lows on a conventional 30-year fixed mortgage, an amazing opportunity for the cost of borrowing and probably the lowest possible in 50 years. The dip won’t last forever, as many people have been trying to project, and eventually what goes down also goes back up. Some amount of rising rates is a firm prediction from the National Association of Realtors® for 2021 which has already occurred, and that loan interest rate cost is expected to eventually go somewhat higher by the end of the year if the economy speeds up again. So, the 2021 window for a valuable refinancing opportunity is clearly the beginning half of the year.
Comparing Current Status to “What If”
Obviously, just chasing a mortgage refinance for minimal gain is silly. The amount paid in closing costs can be expensive. However, when the shift can easily be a percentage point difference or more, then it is worth considering. Many people locked in homes at higher rates in the past and are still paying that amount, especially on an adjustable-rate mortgage. Grabbing a fixed mortgage refinance in the current rate environment is definitely worth the work and time, potentially paying for itself in a handful of years or by consolidating higher cost debt into the home loan.
There is no perfect formula that applies to everyone, but 2021 has already shaped up to be the year that the majority of homeowners can definitely benefit from, especially given the need for financial reserves and a bit of personal finance reorganization after 2020. As always, consult with your professional mortgage advisor for details on your personal situation.
