Homeowners Say ‘Yes, Please’ To Refinance Their Savings As Mortgage Rates Stay Low

Homeowners Say ‘Yes, Please’ To Refinance Their Savings As Mortgage Rates Stay Low

Homeowners who have been slow to take advantage of the pandemic’s historically low mortgage rates seem to have realized an important realization: even though the COVID-19 situation in the United States is as bad as it has been since January, when Mortgage rates have reached record highs, rates are not expected to drop to all-time low again.

This helps explain the significant jump in refinancing demand reported by the nation’s largest professional mortgage association.

Many people have delayed refinancing: A recent study found that 78% of eligible homeowners chose not to swap their mortgages for ultra-low rates between April 2020 and April 2021. But that’s not wise, because of those who refinanced during the study period, almost half are saving $ 300 or more per month.

Given the potential benefits, it’s no wonder homeowners are now rushing to refinance.

Refinancing demand explodes amid low interest rates

Man filling out mortgage application online

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For the week ending Sept. 17, loan refinancing requests were up 7% from the previous week, the Mortgage Bankers Association reported on Wednesday.

This is the biggest increase in refi demand since July. Joel Kan, associate vice president of forecasting at the MBA, attributes the increase to homeowners taking advantage of low mortgage rates, which have been both attractive and relatively static for weeks.

“Homeowners acted as rates remained low at 3.03%,” Kan said in a statement, referring to the average rate on a 30-year fixed mortgage in the MBA’s weekly survey.

Many borrowers get landing rates above 3.03%. Mortgage giant Freddie Mac’s long-term rate survey last week estimated the average for a 30-year mortgage at just 2.86%, and several lenders are now offering even lower refinance rates.

Why now is the time to strike

businessman Hand change wooden cube block with percentage up and down arrow symbol icon.  Interest rate, stocks, financial, ranking, mortgage rates and loss reduction concept

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Examining two recent statistics should help clarify why it is now, and not later, to move forward with refinancing your mortgage.

After the government released a glowing jobs report in July during the first week of August, the average rate on a 30-year fixed mortgage soared, according to Freddie Mac. But in the weeks following the release of the relatively gruesome August jobs report in early September, rates have been fairly stable – and cheap.

Lesson? At this point in the pandemic, positive economic news is likely to drive mortgage rates up more than negative news will drive them down. Sure, hospitals in some states are filling up with COVID patients to levels not seen since January, but businesses are open, travel restrictions are loosening, and consumer confidence has strengthened.

As long as the economy is allowed to function normally, it can grow and improve; every significant improvement has the potential to ease the downward pressure the pandemic is putting on mortgage rates. Expect more of these positive developments and higher mortgage rates in the future.

How to get a low mortgage rate from your lender

Happy African American couple clients shaking hands and signing mortgage contract

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It’s hard to get approved for a home loan, let alone get offered a low rate, if you’ve racked up a mountain of expensive debt. If payments to multiple creditors frustrate your home buying plans, consider doing a debt cleanup.

By consolidating all of your credit card balances and other stubborn high interest debt into one low interest debt consolidation loan, you will pay much less interest and pay off your debt faster. This could free up the kind of cash flow that lenders are looking for.

It’s also important to take a quick, free look at your credit score. Borrowers with the highest credit scores are usually offered the lowest rates. A review of your score will tell you if you need to work on it, so you won’t apply to a lender and will receive a higher rate.

Once you’ve decided to refinance your home, you’ll want to check the mortgage offers of at least five lenders to see who’s offering rates that fit your budget. Comparison shopping is a proven way to save big on a new mortgage.

If a refi isn’t for you, you can always find other ways to lower the cost of home ownership. When it comes time to purchase or renew home insurance, shop around and get quotes from multiple insurers because you could save hundreds of dollars.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

About Joan Ferguson

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