Hey there! You know what’s great about an economic slump? Cheap credit! And when a global pandemic hits, mortgage rates usually drop. So, if you’re a homeowner, now’s the perfect time to refinance your mortgage. Why? Because rates are at an all-time low. Let me share some tips on home mortgage refinancing from my own experience.
Since 2003, I’ve refinanced five properties more than a dozen times. So, I’ve got some insider knowledge on how to pay the lowest fees and get the lowest interest rate possible.
First, check the latest mortgage rates online through a marketplace. They’ve got a huge network of lenders, and you can get real quotes from qualified lenders in minutes. No strings attached!
Refinancing can seem scary, but with the right representative and mindset, it’s a breeze. In 2019, I refinanced my main home with a 7/1 ARM at 2.625% with no costs. In 2020, I got preapproved for a 7/1 ARM at only 2.125% because interest rates dropped even more!
I get relationship pricing because I have over $1 million in assets with the lender. But even without that, I could get a 7/1 ARM for only 2.5% in 2021 and beyond.
As someone who has refinanced over 10 mortgage loans since 2005, I want to share my tips to help you get the best rate possible.
Refinancing a mortgage takes longer now than it did 10 years ago because the lending industry has become stricter. You need good credit, a job, and your paperwork in order to take advantage of low rates. But with the housing market likely to stay strong, it’s a great time to be a homeowner. You’ll not only see your home’s value increase, but you can also lower your monthly housing costs.
Here are some key tips to know before you start your refinancing journey:
- Understand How Inflation Affects Mortgage Rates: Knowing when to refinance is like being a bond trader. They obsess over inflation assumptions, and you should too.
- Matching Duration Is Crucial: Consider matching your fixed rate duration with the time you plan to hold or pay off the loan.
- Refinancing Costs Make A Big Difference: There are a bunch of costs that go into refinancing which unfortunately eat into the savings of refinancing.
- 30-Year Fixed vs. Adjustable Rate Mortgages: The benefit of a 30-year fixed loan is that you know what your payments are for 30 years.
- PITA FACTOR (Pain In The A** Factor): It would be nice if one could just snap one’s fingers and change the terms of the loan. Unfortunately, it’s not that simple and you need to spend at least 5 hours of your time speaking to your mortgage representative and preparing and signing the paperwork.
If your mortgage rate is currently above 4%, consider calling your local bank’s mortgage department. Ask what their latest rates are at various durations. The phone call is free, and you will potentially save thousands over the years.
To recap all the home mortgage refinancing tips: 1) Ask for rates 1% lower than your existing mortgage rate, 2) match your fixed rate duration with the length you plan to pay off the loan and/or own the property, 3) Calculate the break even duration by adding up the cost of refinancing divided by the monthly savings, 4) Consider refinances the loan if the break even duration is below 20 months (lower the better) and you plan to hold the loan for longer than 5 years.
If anything is unclear, please feel free to ask! All my home mortgage financing tips are there to help you.
There is a great opportunity to buy real estate during a pandemic. Mortgage rates are at all-time lows and any seller listing now is motivated.
If you’re looking to buy property as an investment or reinvest your house sale proceeds, take a look at Fundrise, one of the largest real estate crowdfunding platforms today. They allow everyone to invest in mid-market commercial real estate deals across the country that were once only available to institutions or super high net worth individuals.
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Less than 5% of the real estate deals shown gets through the Fundrise funnel.
Remember, these mortgage refinancing tips are here to help you make the most of your financial situation. Happy refinancing!
