As homebuying rises, is it still a good time to refinance your home?
Despite the global pandemic, the US housing market remains strong. Don’t wait to refinance. Right now is likely the safest time to get a record-low mortgage refinance loan. (iStock)
Despite the coronavirus pandemic, home sales are booming. Americans have taken advantage of the historically low mortgage rates. The Mortgage Bankers Association (MBA) forecasted mortgage loan originations totaling over $3.18 trillion in 2020, with refinances accounting for $1.75 trillion.
The MBA anticipates purchase originations to stay at near-record highs this year. But they predict the overall mortgage refinance rate will slow down and total to just $946 billion as the economy stabilizes from effective vaccines.
You can explore your mortgage refinance options by visiting Credible to compare rates and refinance lenders. If you’re curious whether to refinance your home this year, read on to learn reasons why it’s still likely the best time to take out a mortgage refinance loan.
Mortgage refinance rates are at historic lows
The 30-year fixed mortgage rates are close to the lowest they've ever been, according to Freddie Mac records going back to 1971. Mortgage rates are determined by many factors including the inflation rate, the pace of employment growth, the state of the U.S. economy, and the Federal Reserve’s monetary policy.
The Federal Reserve aims to maintain economic stability and changes to monetary policy can increase or decrease interest rates. The pandemic prompted the Fed to lower rates to stimulate growth due to economic decline and uncertainty.
Dropping your interest rate even by 1% can put about 10% of your mortgage payment back in your pocket each month. If you’re thinking of refinancing your mortgage, the interest rates show that it’s probably the best time. You can check out the refinance loans you qualify for on a marketplace like Credible.
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Homeowners can expect an adverse market refinance fee
The Federal Housing Finance Agency (FHFA) implemented the new adverse market fee which is an additional 0.5% fee that is charged to conventional refinances and cashout refinances sold to Freddie Mac and Fannie Mae. On a $200,000 loan, this fee would cost refinancers an extra $1,000.
You can visit an online marketplace like Credible to tap into your home's equity and view cashout mortgage refinance rates.
How borrowers are charged this fee depends on the mortgage lender. Lenders may add it either to the closing cost, the loan amount or by raising the interest rate. Exemptions from the fee include refinance of mortgage loans under $125,000 and affordable refinance programs from Freddie Mac and Fannie Mae.
Homeowners who previously delayed refinancing their mortgage loan are now regretfully paying extra. Waiting again could mean other unforeseen consequences.
Credible can help you compare mortgage lenders and discover the best refinance rates available today, so you can lower your monthly payments and meet your financial goals.
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Nothing is guaranteed during economic uncertainty
Millions of American homeowners are still waiting for the best time to refinance their mortgage — skipping on the chance to save hundreds of dollars on their monthly mortgage payments — yet all of these savings aren’t guaranteed to last.
Why are homeowners reluctant to refinance their home loans? The adverse market fee is deterring many homeowners from pursuing a new mortgage, however, when combined with interest rates at historic lows, homeowners are still saving a considerable amount.
During times of economic uncertainty, nothing can be said for sure. We’re facing something that no Americans have faced in modern history. Interest rates might start to climb or the cost to refinance could go up.
If you're curious about refinancing your mortgage, you can use Credible's free online tool to research different mortgage refinance lenders and see what your loan options are.
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Right now is the best time for a mortgage refinance
We don’t know when or if we will ever see these interest rates again. This is why the best time to refinance your home mortgage loan is right now.
Maintaining a good credit score is another way to ensure you’re getting the lowest possible mortgage rates and paying less interest over the term of your loan. However, if you do have bad credit, you can work to improve your credit score or consider mortgage refinance options for potential borrowers with bad credit.
Consult a financial advisor to review your options. Visit Credible to get in touch with experienced loan officers and to get your mortgage questions answered.
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