During the pandemonium of the COVID-19 pandemic, there is one bright spot – the housing market. As the Federal Reserve continues to drive down interest rates, the housing market has been boosted to record levels. The combination of low interest rates plus readily available credit has fueled the sector to record levels. Homeowners are refinancing, and homebuyers are taking out new mortgages.
The record-low interest rates are adding a strong motivation for homeowners to refinance. Many mortgage borrowers would benefit from these low rates. Every mortgage holder has a different situation and refinancing isn’t a decision to be taken lightly. Andrew Schrage, the co-founder and CEO of Money Crashers said, “Given the dollar amounts at play, even for owners of modestly valued homes, refinancing is one of the most reliable and impactful ways to take advantage of low-interest rates.”
Ask the following questions before deciding to refinance or not:
- Are you looking for a shorter loan term?
- How much can you pay every month?
- Do you want a lower payment?
- Do you want cashback?
- How long do you want the loan to go?
- What is your credit score?
- What is the market value of your house?
Asking these questions before making a decision is important because cost-benefit analysis goes into every refinancing. If you only have a few more years on your loan, the fees would not make it beneficial even with an interest-rate reduction. Depending on the situation, two percent may not be worth it, but for others, 0.5 percent will pay for itself in no time. The longer you plan to keep your loan, the more it makes sense.
A senior vice president of a mortgage lending company said she feels like she is selling war bonds. In the 40s, it was viewed as a “patriotic duty” to purchase was bonds. It may be quite a stretch to call refinancing your “patriotic duty,” but it may still be a good idea for you and the US economy. The industry is processing double to triple the amount of loans as on a usual basis. It has gone from a sprint to a marathon.
Borrowers will be required to have stable employment to qualify for a new loan during the pandemic. Even if you are eligible for a lower interest rate, you may see the loan guidelines are more restrictive than before the crisis. Lenders must consider the default risk, especially during these times of many unknown factors. The process may take longer than usual, averaging 60 to 90 days. The overwhelming number of requests has slowed the approval time. Despite these new challenges, homeowners are not slowing down pursuing refinancing during these times of low interest rates. Don’t be afraid to act fast, because the opportunity may be gone as quickly as it appeared.
Mentor OH Real Property Lawyer
If you are purchasing a new home, contact Heather Moseman at Moseman Law Office, LLC. She understands the complexities of home buying and can help you understand your options to make the best decision. Contact our office today to set up an appointment. Moseman Law Office is a full-service legal firm located in Mentor and serves all of Northeast Ohio.