Present refinance rates are running at all-time lows, making mortgage refinancing more lucrative than before. But MiMutual’s Hale Walker is of the opinion that people should consider the total refinancing cost and not only the amount by which interest rates will lower. In an interview, Walker talks about current refinance rates, the refinancing options and general refinancing with respect to a mortgage.
What Does Refinancing Mean?
In simple words, refinancing a mortgage implies taking out a fresh mortgage loan in order to pay off a previous one, mostly at a lesser rate. But refinancing does not only imply lowered mortgage rates. Other costs adding up to refinancing take into account origination, appraisal as well as other fees which might lead to a costing which is more than what you save.
Present Refinance Rates Hitting All-Time Lows
According to Walker, the idea of obtaining the lowest possible interest rates on the market is a kind of “hogwash”. Instead of becoming a prey to the hype regarding the lowest rates ever, he advises homeowners to take a look at their respective specific situations in order to see whether the time is correct and what the different refinancing options are.
Nevertheless, Walker also says that this type of low rates have not been seen before. There would be considerable savings if one is capable of knocking a couple points off the interest rates related to mortgage.
Year 2014- Refinancing a Mortgage
In spite of the remarkable lows in the current mortgage loan market, decisions to refinance should not be taken by homeowners solely on the basis of that aspect.
Walker said that they are more at ease lending today since they are quite convinced of the fact that the market has bottomed out. If you can smoothly make payments, possess a good job and every credit of yours is proven, there would not be any problem refinancing. Moreover, this can take place within a quick time frame.
He explains that right now, bigger banks are meting out mortgages over slow timelines while independent lenders and community banks are doing the same at a much faster pace.
While discussing on refinancing options, Walker clearly states that the procedure has undergone significant changes from the days prior to the financial crisis. As compared to 2007, much more documentation is required now. At present, along with the credit score, income and payment history is also being valued.
Would you be Able to Afford Refinancing Cost?
Walker urges careful steps in case of a home refinance. He asks homeowners to answer significant questions regarding the intended outcome of the refinance, such as- Do you wish to have a lower payment per month? Are you looking forward to a mortgage with a shorter term, or just one with a lesser interest rate?
Once you wish to refinance a mortgage, the most excellent thing to do is to have a conversation with an efficient lender regarding your unique financial situation. The answers that you get from these lenders would help you in the long run.