Is it Too Late or Time to Refinance?
time to refinance

Should You Refinance Your Home Loans? 

Refinances are occurring nearly twice as frequently as they were a year ago. Those who are taking advantage of refinancing opportunities are saving an average of $300 a month! So, is it time for you to refinance your home loans?

According to CoreLogic, about 20 million Americans have home loans that are sitting at interest rates higher than 4 percent. You may be one of those 20 million homeowners. So, this may be the right time for you to refinance! 

 

Why Refinance? 

Many people decide to refinance their mortgage to save money. 

The most popular reasons to refinance are to lower your interest rate, remove Private Mortgage Insurance (PMI), reduce the loan term, or switch loan type.

 

The Adverse Market Refinance Fee

The Federal Housing Finance Agency (FHFA) who oversees Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) started collecting a 0.5% “adverse market fee” for conventional loan refinances. 

This fee went into effect on December 1, 2020. So, this additional fee applies to both cash-out and non-cash-out refinances. But, if you have a refinance with a loan balance of less than $125,000, you are exempt from this fee.

 

Is it Too Late to Refinance?

However, this refinancing fee should not hold you back from refinancing your current mortgage. While it is an added expense for conventional loan refinances, low interest rates remain to play a huge part in overall savings.

To figure out if refinancing makes sense for you, here are four details to consider:

  1. How long do you plan on staying in your current home?
  2. Can you refinance into a shorter loan term? (i.e. 30-year loan to a 15- or  20-year loan)
  3. How much are closing costs?
  4. How long will it take you to recoup the closing costs?

 

Bottom Line

After considering these details and whether refinancing makes financial sense for you, are you ready for a refinance reset in 2021? If you think so, be sure to seek advice from an expert and contact your loan officer for more information. 

They will help you reach your mortgage and financial goals for the new year. Also, be sure to ask any questions you have. Your loan officer is there to set you up for financial success!