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Is This "As Good as it Gets" for Mortgage Rates?

It would be a huge understatement to say that 2020 has been an eventful year. With so many noteworthy things happening, you may have missed one bright spot of good news: Home mortgage rates have reached historic lows. This puts more buying power into the pockets of those looking to buy a new home, and potentially offers substantial savings for those with an existing mortgage who qualify to refinance to a much lower interest rate and/or shorter term, even if they already refinanced in the past year.


Fannie Mae recently reported that up to 60% of all American households could benefit from refinancing their home mortgage. Are you one of those homeowners? If so, here are answers to a few of the most common questions:

Doesn’t refinancing cost a lot? I just refinanced 18 months ago and paid quite a bit in closing costs.

Most lenders are able to offer substantially better rates to the most qualified borrowers that might include enough of a lender credit to cover all or most of your closing costs. These costs include origination, underwriting, appraisal, title and recording fees. Of course, if you want to get the lowest interest rate possible, be prepared to pay thousands of dollars in points to do so. (We typically don’t recommend doing this, as the benefit usually doesn’t outweigh the additional costs.) But we feel that most homeowners are in a position where it makes sense to refinance at no cost.

Isn’t it a big hassle to refinance?

Not necessarily – while there may be some circumstances that are more complicated than others, they typical borrower need only provide proof of income and assets. In many cases, an home appraisal may not be required, and some title companies will allow for virtual closings so you never have to leave your home. However, you need to be prepared for the process to take upwards of 4 weeks as most lenders are literally swamped with new loan applications.

What if I have 24 years left on my 30-year mortgage – would I have to “re-start” on another 30-year mortgage?

You will want to have your broker do some math on your situation, but in many cases, even if you add years to a loan, you could still pay it off sooner by making the same monthly payment but at a lower interest rate. Additionally, some lenders offer loan programs with flexible “off year” terms, offering anywhere from 29 years to 8 years, so there is always an option to get a new mortgage that fits your payment budget and saves you thousands in interest over the life of the loan.

Bottom Line:

It only takes about 30 minutes to reach out to a qualified broker who can help you determine whether refinance makes sense for you. As Matthew Graham of Mortgage News Daily recently stated: “The current low rate environment is like nothing we've ever seen before. It's easy to tune out the constant advertisements and news stories about ‘all-time low rates,’ but this time around, the refinance process is very much worth investigating right now.”

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