Homeowners who have been slow to take advantage of the pandemic’s historically low mortgage rates seem to have realized an important realization: even though the COVID-19 situation in the United States is as bad as it has been since January, when Mortgage rates have reached record highs, rates are not expected to drop bottom yet.
This helps explain the significant jump in refinancing demand reported by the nation’s largest professional mortgage association.
Many people have delayed refinancing: A recent study found that 78% of eligible homeowners chose not to swap their mortgages for ultra-low rates between April 2020 and April 2021. But that’s not wise, because among those who refinanced in the period of time study, nearly half save $ 300 or more a month.
Given the potential benefits, it’s no wonder that homeowners now seem to be rushing to refinance.
Refinancing demand explodes amid low interest rates
For the week ending Sept. 17, mortgage applications rose 4.9%, driven by a 7% increase in refinancing loans, according to the Mortgage Bankers Association. reported wednesday.
This is the biggest increase in refi demand since July. Joel Kan, associate vice president of forecasting at the MBA, attributes the increase to homeowners taking advantage of low mortgage rates, which have been both attractive and relatively static for weeks.
“Homeowners acted as rates remained low at 3.03%,” Kan said in a statement, referring to the average rate on a 30-year fixed mortgage in the MBA’s weekly survey.
Many borrowers get landing rates above 3.03%. Mortgage giant Freddie Mac’s long-term rate survey this week puts the average for a 30-year mortgage at just 2.88%, and several lenders are currently offering even lower refinancing rate.
Why now is the time to strike
Examining two recent statistics should help you understand why now, and not later, is the time to move forward with refinancing your mortgage.
After the government released a glowing jobs report in July during the first week of August, the average rate on a 30-year fixed mortgage soared, according to Freddie Mac. But in the weeks since the relatively horrible august employment report was released in early September, rates have been fairly stable – and cheap.
Lesson? At this point in the pandemic, positive economic news is likely to drive mortgage rates up more than negative news will drive them down. Sure, some state hospitals are filling up with COVID patients to levels not seen since January, but businesses are open, travel restrictions are loosening, and consumer confidence has strengthened.
As long as the economy is allowed to function normally, it can grow and improve; every significant improvement has the potential to ease the downward pressure the pandemic is putting on mortgage rates. Expect more of these positive developments and higher mortgage rates in the future.
How to get a low mortgage rate from your lender
It’s hard to get approved for a home loan, let alone get offered a low rate, if you’ve racked up a mountain of expensive debt. If payments to multiple creditors frustrate your home buying plans, consider cleaning up your debt.
By consolidating all your credit card balances and other stubborn high interest debt into one, low interest debt consolidation loan, you’ll pay much less interest and pay off your debt faster. This could free up the kind of cash flow that lenders are looking for.
It is also important to take a quick, check your credit score for free. Borrowers with the highest credit scores are usually offered the lowest rates. A review of your score will tell you if you need to work on it, so you won’t apply to a lender and will receive a higher rate.
Once you’ve decided to refinance your home, you’ll want to view mortgage offers from at least five lenders to see who offers rates that suit your budget. Comparison shopping is a proven way to save big on a new mortgage.
If a refi isn’t for you, you can always find other ways to lower the cost of homeownership. When the time comes to purchase or renew home insurance, shop around and obtain quotes from several insurers – because you could save hundreds of dollars.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.