Why is now the best time to refinance your mortgage - ForumDaily
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Why is now the best time to refinance your mortgage

Mortgage and refinancing rates have consistently hit record lows since the Federal Reserve made emergency cuts amid the COVID-19 pandemic. With current interest rates so low, it's no surprise that mortgage refinancing applications are on the rise. FoxNews told why you should refinance your mortgage now, and how long to hold out low rates.

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According to the Mortgage Bankers Association (MBA), refinancing accounted for 66,7% of all applications for mortgage loans. The total number of mortgage refinancing applications is also 80% higher than at this time last year.

Many are now evaluating their personal finances to determine whether they are ready to refinance. Before you can answer this question, you need to do some thorough research—and that's where an online marketplace like Credible can help. With Credible, you can compare multiple mortgage lenders at once and find lower refinance rates to save you money and valuable time.

What is the lowest mortgage rate now

Here are the current average mortgage rates, according to Freddie Mac:

  • 30-year flat rate: 2,81%
  • 15-year flat rate: 2,32%
  • adjustable rate for 5/1 year: 2,88%

The lowest mortgage rate right now is the 15-year fixed rate, but that's not the only notable number. The 30-year home loan rate is 0,09% lower than this time last month and 0,97% lower than this time last year.

Loan rates below 3%, now is a great time to refinance your mortgage.

Why you need to refinance your mortgage now

There are many advantages to refinancing at a low rate. But this is not the only plus of refinancing. Here are some of the benefits of refinancing your mortgage now.

  • Lower monthly payments
  • Lack of new commission on the "unfavorable market"
  • New loan conditions
  • Potential savings

1. Lower monthly payments. Many homeowners find that refinancing is a great way to lower their monthly payments, and the savings they receive from refinancing give them the opportunity to address other financial concerns.

2. Lack of a new commission on the "unfavorable market": Earlier this year, Fannie Mae and Freddie Mac, the two agencies that handle the bulk of real estate loans in the United States, announced that they would be assessing a “hard market” fee on all refinance loans purchased. This fee will be equal to 0,5% of the loan amount and will be added to the borrower's refinancing costs.

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The commission is officially scheduled for December 1, 2020. However, many mortgage lenders will soon start adding commissions to homeowners' expenses, as this also applies to any mortgages that will be transferred to Fannie and Freddie after that date. With this in mind, if you want to refinance without paying this commission, it may be best to do so sooner rather than later.

3. New loan conditions: refinancing gives you the opportunity to change the current terms of your mortgage loan (in fact, you replace the old terms with new ones).

4. Possible savings. Part of deciding whether it makes sense to refinance is figuring out how much you can save. If you want to speed up your savings calculation, use an online refinance calculator to see how much you can save on your monthly payment.

How to get mortgage refinancing

Keep in mind that the refinancing process is a lot like getting a new home loan. In this case, you simply take out a new loan and use it to pay off the old one. To do this, you need to fill out a loan application, submit documents to your lender and go through the underwriting process. Once your application is approved, you will complete additional paperwork to receive your new home loan.

However, just like when you took out your first home loan, you will have to pay the closing costs for refinancing. Since refinancing requires a prepayment, it doesn't always make financial sense. For example, if you don't plan on staying in your home for long, you may not be able to recoup the cost of refinancing before you move.

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With this in mind, if you are still wondering if refinancing makes sense for you, your best bet is to speak with a mortgage specialist.

Record low rates

Historically speaking, mortgage rates are currently at an all-time low. However, there is no guarantee that they will last long, which means that if you are thinking about refinancing, now might be the perfect time.

However, whether you are a candidate for a home equity restructuring will depend on your unique financial conditions. To do this, the first thing you should do is talk to a lender who can give you personalized advice.

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