Lower rates mean more opportunities for homeowners

Millions of homeowners could now save on their mortgage payments every month, according to a new report. That’s because they’re suddenly “in the money” to refinance following a dramatic drop in mortgage rates in March.

These rate cuts mean that nearly 5 million people who previously didn’t make sense of refinancing can now go ahead and claim serious savings.

The report comes from Black Knight’s Data and Analytics division, which claims to manage “the country’s leading repository of residential mortgage-level loan-level data.”

Buy low rates from the best lenders. (Jul 20, 2021)

How much can you save?

The amount you could personally save will depend on the amount of your mortgage. When CNBC covered the report, he gave examples.

If you are currently paying a rate of 4.81 percent, you may now be eligible for a rate of 4.06 percent. And, if you have a loan of $ 300,000, you will save $ 133 per month. Those with larger loans would save proportionately more: $ 267 out of $ 600,000. But, of course, those with smaller ones would save smaller amounts.

The rates change all the time and the CNBC sample rates may no longer apply as of the time of reading this. But you can model your own potential savings by checking current mortgage rates and then using a refinancing calculator.

Other options

The drop in rates last month also makes it more affordable to access the “equity” you have built up in your home. (Your equity is the amount by which the current market value of your home exceeds your mortgage balance today.)

Through a refinancing of collection, you can take out a larger loan than you currently have and receive the difference in cash.

Of course, there are downsides to taking out home equity. And this is something to consider carefully. But if you’re likely to need cash in the near future, maybe now is the time to match that funding. You can choose between cash refinancing, home equity loan, and home equity line of credit (HELOC).

Related: Cash-out refinancing vs home equity loan: the best deal might surprise you

Experts expect lower rates to create higher demand for these products. Ben Graboske, president of Black Knight’s Data and Analytics division, predicts: “… we could see a noticeable rebound in owners who are tapping the available equity through pullbacks over the next few months, given the increase in incentive rate to do so. “

Apply for refinancing rates from up to four lenders. (Jul 20, 2021)

How long will you be “in the money” to refinance?

Mortgage rates can be volatile. March’s rate cuts made it the friendliest month for borrowers in a decade. But such sharp cuts are sometimes followed by a rebound, which can be short and sweet – or longer and more bitter.

And it is true that the last two working days of this month and the first of April saw increases. Of course, these were small compared to the overall decline in March.

What to watch out for

At this time, no one knows whether mortgage rates will continue to rise, hold close to the same level, or resume their downward trend. This will likely be determined by the major news stories and economic reports released in the coming days. In general, events and reports favorable to the US economy tend to be bad for mortgage rates, while unfavorable ones are good.

In general, events and reports favorable to the US economy tend to be bad for mortgage rates, while unfavorable ones are good.

So a successful conclusion to the current US-China trade talks could well see mortgage rates rise, while a bad deal or no deal could drop them even further. The same applies to Brexit and Friday’s monthly employment report. You can follow mortgage rates and find out what factors may affect them in our daily updates:

But this window of opportunity may be short-lived. So if you want to take advantage of it, you might want to go for it.

Don’t forget the closing costs

When you refinance, you get a brand new mortgage. And, just like with your original, you have to pay the closing costs.

But there is good news. You usually won’t have to fund them yourself. Instead, you can consolidate them into your loan, so you can pay them off with the rest of your mortgage.

However, they remain a real cost, even if they are not immediate. So you need to keep them in mind (and the extra interest you’ll pay if you stack it on your loan) when calculating whether the savings you can make are worth it.

Do you have enough equity?

You may be in the money to refinance. But do you have enough equity to qualify?

This may be less of a problem if you want “rate and term” refinancing. This is the one where your goal is to get a better deal and you don’t want to take any money out.

When fairness is not an issue

Indeed, some mortgage loans (FHA, VA and USDA loans) offer rationalize refinancing. It is common for lenders to not require a home appraisal at all. They may not even check your credit score or verify your income or assets.

And that of Fannie Mae “High LTV refinancing option” and the “Refinancing of Freddie Mac Enhanced Relief”Can see that you are approved even if your loan is a little underwater, which means you have negative equity.

When you need fairness

However, if you want a cash refinance, home equity loan, or HELOC, you will likely hit a cap on your loan-to-value ratio (LTV). Lenders often don’t want you to use more than 80% of the value of your home with secured loans. However, some can be more generous, especially for equity lines.

If you choose to refinance, shop around

Think tanks publish study after study. They all come to the same conclusion. Consumers can save thousands of dollars by calling more than one lender.

But many refuse to do so.

With one click, buy up to four of the country’s top lenders below.

Shop the best refinance lenders today now. (July 20, 2021)