FHFA Drops Adverse Market Fee on Refinances

FHFA

FHFA

On August 1, the Federal Housing Finance Agency (FHFA) will drop the Adverse Market Refinance Fee put in place by Fannie Mae and Freddie Mac. Prior to this change, mortgage lenders had to pay the government sponsored enterprises (GSEs) a fee of 50 basis points when completing a mortgage refinance. FHFA began charging this fee on most refinanced mortgages in 2020 when costs and risks to the agency increased because of COVID-19. This fee became controversial as critics said the policy was a way for GSEs to profit during the refinance boom.

Experts expect this change to positively impact mortgage rates and allow more families to take advantage of the current low-rate environment by refinancing. Speaking about the policy adjustment, FHFA Acting Director Sandra Thompson said, “Today’s action furthers FHFA’s priority of supporting affordable housing while simultaneously protecting the safety and soundness of the Enterprises.” 

Click here to learn more about the elimination of the Adverse Market Refinance Fee.

 Are you interested in learning more about mortgage refinances and if you could benefit from one? Call me today to learn more!

Three Reasons to Refinance

savings, finances, economy and home concept - close up of man with calculator counting money and making notes at home

Interest rates are low nationwide, making it an excellent time to refinance your home mortgage loan. If you have not refinanced in the past two years, you could be saving hundreds of dollars per month on your mortgage payment with the right home loan.

Interest rates are low nationwide, making it an excellent time to refinance your home mortgage loan. If you have not refinanced in the past two years, you could be saving hundreds of dollars per month on your mortgage payment with the right home loan.

Here are three great reasons why you should take the step to refinance:

  1. Lower your interest rate. If your home is currently financed at a higher-than-market rate, it could be a good time to refinance. Reducing your interest rate not only saves you money, but may also increase the pace at which you build equity on your home.
  1. Shorten the term of your loan. If you have a 30-year mortgage, now could be a great time to think about refinancing! With the current low interest rates, a 15-year mortgage may not be much more expensive than a 30-year mortgage. Try entering your information into a mortgage calculator to see if the payment is something you can afford.
  1. Convert between ARM and a fixed-rate mortgage. While ARMs often start out offering lower rates than fixed rate mortgages, over time, the loan may see rate increases that are higher than the rate available with a fixed-rate mortgage. If this is the case, converting to a fixed-rate mortgage can result in a lower interest rate as well as eliminate the concern of future interest rate increases. On the flip side, it may be worth it to look at refinancing to an ARM from a fixed-rate mortgage if you know you will only be in your house five to ten more years.

Interest rates are low, so let’s talk about your goals for a refinance! Call me today to set up an appointment.

What Does it Mean to Refinance?

A miniature house over a stack of cash

A miniature house over a stack of cash

Mortgage rates are low nationwide, but the markets are fluctuating. Now may be the right time to refinance your home mortgage. As your Mortgage Planner, I would love to review your current rate with you to determine if this may be the ideal opportunity to refinance your mortgage loan.

By refinancing your home, you are paying off the current mortgage loan with a new mortgage loan with rates and terms that better serve your financial interests. The refinance process is very similar to the purchase mortgage process. We will require a new home appraisal (which we order) to determine the current value of your home. We will also verify your employment, calculate your household income and ongoing debts, and make sure that you are qualified for the new mortgage loan.

One of the most beneficial reasons for refinancing a mortgage is to save money on interest expense and monthly payments. Homeowners can choose to invest their monthly savings back into the home to pay it off more quickly, save or invest the funds elsewhere, pay down other debt, or pay for future expenses such as college or retirement. By decreasing the terms of your mortgage, you are also saving money on interest over the life of the loan.

Take advantage of current interest rates and refinance your home. I would love to meet with you to assess your financial goals and see if refinancing your home is right for you. Call me today to set up an appointment.

The Benefits of Refinancing

A miniature house made out of 100 dollar bills

A miniature house made out of 100 dollar bills

When considering refinancing your home, it is important to determine what goals you have for your short-term and long-term finances. When you refinance, you pay off your current mortgage loan with a new mortgage loan that has rates and terms that should better suit your overall financial needs.

Let’s meet soon to discuss your objectives for the coming years. We can look at where interest rates are now and what closing costs would be on a refinance, and then I can put together a plan that is right for you.

There are many ways that refinancing your home mortgage loan could benefit you:

  • Reduce your interest rate – If your home is currently financed at a higher-than-market rate, you may be able to reduce your interest rate and overall interest costs by financing at a lower rate. Over time, this could save you a great deal of money!
  • Extend terms to lower monthly payment – You may be able to extend the repayment time of your loan, which will also lower the monthly payment. If you are looking to improve your cash flow, this may be a good option for you. Just keep in mind that you will be making payments on your home for a longer period of time.
  • Build equity faster – You may also be able to shorten the term of your mortgage, which could reduce your interest rate and/or overall interest expense. By moving to a 15-year fixed rate, you might be able to pay off your home sooner without increasing your monthly payment by much.
  • Change from variable to fixed rate – You may be able to reduce your monthly payment by changing from a variable-rate to fixed-rate loan. This may help free you from the potentially expensive interest rate/payment fluctuations that can occur in a volatile real estate market by locking in a low, fixed interest rate.

I would love to meet with you to assess your financial goals and see if refinancing your home is right for you. Call me today to set up an appointment and we will work together on the best plan for you.

Now Is THE Time to Refinance Your Mortgage!

A pink piggy bank with coins leading up to a miniature house

A pink piggy bank with coins leading up to a miniature house

Have you refinanced your mortgage in the past year or more? If not, don’t feel like you’ve missed the boat! Refinancing could be the key to paying off your debts, reaching your financial goals, and putting a little more cash in your pocket.

Answer these questions to see if you would be a good candidate for refinancing:

  1. Would you like a lower monthly house payment? (Who wouldn’t?) We may even be able to do this as a true no-cost refi.
  2. Are you paying PMI? We might be able to reduce (or possibly remove) that PMI expense.
  3. Do you have an ARM on your loan? Fixed rates are close to all-time lows. Refinancing now could save you from rising interest rates later.
  4. Do you have large financial goals such as paying down debt or buying a second home that could be easily reached by refinancing your current home?

If you answered ‘yes’ to any of these questions, I would love to talk with you about refinancing your mortgage. Whether or not you should refinance may depend on multiple factors. As your Mortgage Planner, I would love to help you decide if it is right for you. Call me today to set up an appointment!

6 Myths of Refinancing

Refinancing typed out in bold on a piece of paper

Refinancing typed out in bold on a piece of paperRefinancing your home loan with the current low rates may save you money every month, but there are potential problems that may arise when you don’t have the right person guiding you. As your Mortgage Planner, I am here to answer your questions and set you up for future financial success. There can be a lot of misunderstanding when it comes to how a refinance may work, so be sure to avoid these common misconceptions, myths and mistakes.

  1. You don’t know your current credit score or you are unsure you can save money – Be certain to obtain your credit score as this will be key in determining the rate you receive. You can use the refinance calculator on my website to estimate your new monthly mortgage payment before we talk, but it is a good idea to have me analyze the numbers for you to obtain a more accurate view of what you can save.
  1. Opening new credit accounts and running up debt – It is important to know that lenders check your credit when you apply for a refinance and again just before the settlement. Making large purchases on a credit card or applying for new credit could cause delays in the approval process.
  1. Being unrealistic about your home’s value – I am happy to sign you up to receive a monthly view of the sales price of homes in your immediate area so you always have an accurate picture of how much houses are selling for. Some homeowners ignore current home values in their neighborhood and overestimate how much their home is worth.
  1. Neglecting to consider all costs – While lowering your monthly payment is the main goal of a refinance, it should not be the only factor you consider. I will check your current mortgage documents to be sure your loan doesn’t have a penalty if you pay off your mortgage early. Together, we will evaluate the amount of time you have left on your current mortgage and consider the refinance closing costs before moving forward.
  1. Not locking in rates – Mortgage rates change often. I will explain this process to you; but generally, a lock is somewhere between 30 and 60 days. You can trust me to advise you when the best time to lock is.
  1. Failing to calculate the “break-even point” – This is the date when the money you saved by refinancing your mortgage equals what it cost you to refinance. This is important because if you sell your home or refinance before the break-even point, it won’t be worth your while to refinance – it will cost you money rather than save you money.

Refinancing your home can make your monthly bills more manageable or free up your cash flow. It’s too easy to put off a review of your current mortgage because you don’t have the facts about how much a refinance could help you. As your Mortgage Planner, I am here to make sure that your refinance process goes as smoothly as possible with no headaches. Call me today to set up a time to discuss how low rates make this a fantastic time to refinance.

Save on Your Monthly Payments Through Debt Consolidation

Debt Consolidation Loan in big bold text with a green approved stamp on top of paper

Debt Consolidation Loan in big bold text with a green approved stamp on top of paperEven with mortgage rates rising slightly, you can still find a mortgage refinance that will benefit your financial situation. Many homeowners find themselves with debt from student loans, car payments, medical bills or credit card expenditures; but by consolidating those into your home mortgage, you can lower your monthly payments.

By refinancing your mortgage and consolidating other debts such as credit cards and student loans within the mortgage, you can improve your credit rating as well as increase the amount of cash you have on hand. While your monthly mortgage payments may increase, your overall monthly output toward your debt will decrease. The less revolving debt and fewer personal loans that you have in your name, the higher your credit score will rise. Additionally, by paying off the debts with higher interest rates, you can save hundreds of dollars per month in payments.

When you have paid down your home significantly, often more than 20%, and still have revolving debt, debt consolidation within your mortgage could be the solution for you. You can make one monthly payment instead of several and pay less overall every month. Unlike credit cards, the interest on your mortgage is often tax deductible.

For some with erratic spending habits, consolidating your debt may not be the solution, as it will not change spending habits. Once the credit accounts are closed, they must stay this way in order for it to have a positive effect on your credit. If you open additional accounts and run up the balances, your credit score will decrease.

Call me today to set up an appointment! I would love to review your finances and help you determine if a debt consolidation refinance is right for you.

What You Need To Know About A Cash-in Refinance

Money bag with dollars

Money bag with dollarsFor many homeowners, a “cash-in refinance” could be an excellent financial move. In the last decade, an abundance of homeowners have opted for “cash-out refinancing” to take advantage of rising home prices and use their home equity as they see fit.

With today’s interest rates on both home mortgage loans and savings accounts, a cash-in refinance might be a strategic move for a homeowner to eliminate Private Mortgage Insurance (PMI) to pay off a higher interest rate second mortgage or simply lower their mortgage payment.

The idea of a “cash-in refinance” is when a homeowner will bring money to the closing in order to lower their loan-to-value ratio. The homeowner will then have a lower interest rate and lower, or zero PMI.

Take the time to figure out if this idea may be right for you, and we can talk over your options and financial goals. This idea will work well if:

  • You are paying PMI
  • You have a second mortgage
  • You have some savings sitting around only earning 1% or less

If you are planning to move in the next few years, it might be best to keep your money liquid. I can show you a total cost analysis to help determine how long it would take you to recoup the closing costs associated with this kind of refinance. If you don’t have 3-6 months of living expenses available, begin with building that up. You don’t want to save money on a mortgage and then lose it in an emergency, so having savings is key.

I am happy to discuss this idea with you to see if you are better off taking out money from your refinance to pay down debt or put toward a financial goal, or taking that money and putting it toward your loan. Let’s talk soon!