Issue 7.15
Going into the New Year we are getting more than a break at the gas pump as we enter the lowest mortgage rates we have enjoyed in the past two years.
People ask me every week, “How far do rates have to drop in order for it to make sense for us to refinance?” And, “Are we too old to refinance?” “Why would a lender give us a 30 year mortgage at our age?”
There are two important changes in today’s mortgage environment that can help all of us improve our financial situation at home.
1. Interest rates are at a 2 year low. So, realistically anyone that has financed in the past two years could improve their rate and payments most likely. The key is can we re-finance at zero fees and keep the same amortization that I have now. So, if I can you lower your interest rate and payment, and keep the same amortization, meaning the same number of years left on your current mortgage, and it does not cost you any money to do so then why wouldn’t you? Why wouldn’t you? Keep the same number of years on your mortgage, so if you have been paying on the mortgage for two years then keep a 28 year mortgage and lower your interest and payments then do so today. If your lender or bank can’t be that flexible then call our office or a lender that can.
That is the bottom line on all refinances. If you can improve your rate and payment without any fees, then it does not matter if the rates are only a quarter percent better – it makes sense. The key is with any refinances to make sure you are working with a lender or bank that can customize your mortgage to a specific amount of years and have the flexibility to pay off early and refinance for zero costs. So, visit with your lender today or call our office and see if it makes sense as you look at all of your options. Because even I and others in my own office jumped on refinances this past week.
2. Secondly, if you have an FHA insured loan, where you have FHA mortgage insurance then most likely you can improve your situation automatically. FHA on the 26th of January has decreased their interest on their mortgage insurance by a half percent. So, without even lowering your current rate, you can still drop your overall payment by a half percent with the reduction of mortgage insurance. Please contact your lender today to see if you qualify or contact our office. The same rules apply however as discussed above. Can you refinance your note and reduce the interest and or reduce your PMI with FHA for zero costs? If you can, then why don’t you?
Clients always say, “how can there be such a thing as a no – fee loan?” There is, and ask your lender about it. Please don’t add any amount to your current loan, and don’t bring funds to the closing, and if you can improve your mortgage by doing so, and keep the same number of years as a payoff then you need to look at refinancing today.
Until next month, Brandon Hansen.
Brandon Hansen can be contacted at 435-673-4773.