Rates are so low! If you own a home already have you considered refinancing?
In an attempt to stimulate growth in the economy the Federal Reserve committed to purchase mortgage backed securities. They have set aside roughly $40 billion dollars a month as part of the QE3 (Quantitative Easing #3) plan announced September of this year which will continue until signs of positive growth are established and the housing market has strengthened.
Since the Federal Reserve has been purchasing the mortgage backed securities the market has seen a decrease in mortgage interest rates. Currently rates are at historical lows and the timing has never been better to refinance or purchase a new home. House values have stabilized and in some cases appreciated in the Virginia and Metropolitan areas.
The 4.25 percent rate that seemed unbelievable a year or two ago has given way to rates in the low 3s! The rule of thumb is to consider refinancing if the rate drops more than ½ of percent below your current interest rate you should see a benefit with a refinance.
Lower mortgage rates translate to more money in your pocket in the long run. “Depending on your mortgage loan size and current interest rate, a ½ percent difference in interest rate can translate into hundreds of dollars in savings per month, and thousands a year,” says Kevin Walsh of First Home Mortgage. He’s seen an uptick in refinances over the past several months since the rates have continued to dip.
Another scenario to consider is lowering the term of your mortgage loan from the standard 30 year term to 20 or 15 year term. Reducing the term of your loan could save you $10,000’s of thousands of dollars over the life of your loan new loan while increasing your monthly payment slightly. Depending on your age and financial situation, a 15 year term may allow you to pay off your home prior to retirement. In fact, paying your mortgage off in a shorter period of time may accelerate your retirement plans.
Kevin says “there are a variety of loan programs that could save you thousands of dollars a year at little to no cost to the customer.” It starts with a 15 minute phone call to discuss the details. There are even refinance loan programs available that do not require an appraisal.
Contact Kevin or myself to get additional details on things to look out for during a refinance such as points or unnecessary origination fees that may be charged. Another cost savings tip is to ask for the re-issue rate when obtaining new lenders title insurance this will lower your cost.
Refinancing can be an investment tool so make sure you ask a lot of questions and work with a trusted loan officer.
Thanks to Kevin Walsh of First Home Mortgage (my trusted lender who just refi'd my home) for contributing to this blog post. He can be reached at firstname.lastname@example.org or 301-448-5151.
Contact me with any of your Real Estate needs. I'd love to assist.