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Got a Home Loan in Virginia?
Get Low Refinance Rates From Just 2.12%.

Should You Refinance Your Home In 2020?

how-much-are-closing-costsDid you refinance your mortgage a few years ago when refinance rates were at near historic lows? Depending on your situation today’s refinance rates still might be lower and you could find yourself asking, “Should I refinance my home loan again?” There are arguments against serial mortgage refinancing because it becomes too difficult to recoup your closing costs; however, there are also situations when it makes perfect sense to refinance your home one more time. Here are several of the pros and cons of home refinancing to help you make an informed decision and avoid losing your hard-earned cash.

Serial Mortgage Refinancing Gets Expensive

Financial analysts and reporters are always predicting that refinance rates have bottomed out and speculating how the market will correct to over six percent. Despite this, depending on the type of mortgage you’re shopping for it’s still possible to get refinance rates as low as 2.87%.

Granted that’s a 5/1 Adjustable Rate Mortgage and you really need to know what you’re doing with a home loan like that; however, there are still 30 year fixed rate deals to be found in the neighborhood of 3.12%.

If you got less than a stellar deal several years ago you might be surprised to find that you can qualify for attractive rates with several of today’s best mortgage lenders.

When Is Home Refinancing a Bad Idea?

One of the biggest problems with refinancing any mortgage loan is that you’re resetting the clock on your home loan’s amortization. Mortgage amortization is a fancy term that simply describes the process of paying down your home loan over time.

Your mortgage loan is front-loaded with interest, meaning in the early years the majority of your payment goes into the lender’s pocket as interest. Over the years this gradually shifts and you begin building equity in your home at a faster rate. As soon as you refinance the rate you’re building equity all but grinds to a halt.

If you’ve been paying ten years on a 30-year fixed rate mortgage and you refinance with another 30-year home loan, you’re right back where you started stuffing cash in your lender’s pockets.

Depending on where you live in the country slowing your progress of building equity could also result in being underwater, meaning you owe your lender more than your home is worth.

There’s More To Life Than Low Mortgage Rates

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Get The Best Mortgage Rates Today

As current mortgage rates rise you’ll find the competition for your loan heating up. The problem is that banks and mortgage lenders start pitching gimmicks to stand out from the competition. There’s nothing sexy about mortgage loans, so it’s important to recognize that most lenders are simply selling snake oil. Here are several tips to help you get the best mortgage rates today without falling for lender gimmicks.

Mortgage Rates Today

It’s no secret that mortgage rates today are higher than they were this time last year. Higher rates mean lenders are closing fewer loans and start making far-fetched claims and promotions to attract borrowers. Many lenders offer reduced closing costs or offer to lock your mortgage rates for free.

Truth be told, most of the fees your lender is so generously offering to waive are simply junk fees that you shouldn’t be paying in the first place. All the major lenders are guilty of this including Bank of America and Wells Fargo.

Smaller lenders might not offer the same discounts or make outlandish claims; however, they all seem to be resorting to some form of nonsense to win your business.

How To Shop For The Best Mortgage Rates

When shopping for the best deal for your next home loan it’s important to focus on the interest rate AND the fees you’re being charged to get that rate. If you jump for $500 off your origination fee or a so-called “relationship discount” you’re missing out on the deal you could be getting.

Your lender could be offering you a discounted closing but if the overall mortgage rates and fees are higher than what a community credit union is offering those discounts are worthless.

Here’s a Discount If We Screw Up Your Home Loan

One of the worst “discounts” I’ve seen being offered is reducing fees if the mortgage lender screws up. Do you really want to choose a lender that’s offering a discount for not getting your home loan done right the first time? How much consolation are reduced fees for a boatload of stress? Not to mention if you lose your interested rate and wind up with a higher payment.

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There’s a lot of talk in the news that rising refinance rates might derail our economy’s recovery. Those working in the mortgage business point to uber-low refinance rates as the reason things were improving for most Americans. Have you been on the fence about refinancing only to watch refinance rates skyrocket towards five percent? Here’s 5 easy tricks you need to know to save money locking in your lowest payment before the opportunity slips away.

Rising Refinance Rates Are Good Motivation

You might think rising refinance rates would put the brakes on demand for refinancing. I’m noticing a different reaction, people I know that haven’t already done so are clamoring to refinance before the opportunity is gone.

No one figured refinance rates would take off, people counted on interest rates falling or staying where they are. Now, seemingly overnight, mortgage rates have shot up and given many homeowners the necessary kick in the pants to do something about refinancing their home loans.

If you’re in the market to refinance you might wonder how the lender fees you pay affect the deal you’re getting. In fact, your mortgage settlement fees make or break your mortgage, especially now that refinance rates are above four percent. Here are 5 smart moves to make now and get a better deal than your neighbors, despite rising refinance rates.

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Should I Choose Adjustable Refinance Mortgage Rates?

Mortgage refinance rates are rising and if you’re in the market for a new home loan the temptation for many loan officers is to push home loans with adjustable interest rates. Can you limit your risk and still save money refinancing with an adjustable rate mortgage? Here are several tips to help you make an informed decision on your next home loan despite rising mortgage refinance rates.

Mortgage Refinance Rates Are Rising Fast

Have you been procrastinating refinancing your home because you didn’t want to pay the closing costs? Over the past several weeks mortgage refinance rates have jumped nearly one percent across the board. Bank of America is currently showing 30-year fixed mortgage refinance rates at 4.625%, up from just under 4% two weeks ago.

This is a pretty dramatic increase considering two months ago you could have locked in three percent for 30-year fixed mortgage refinance rates.

Interest rates on 15-year fixed rate mortgages are also up, most lenders are quoting mid three percent, where a month ago you could lock 2.5%. The bond market is tanking which is bad news for mortgage refinance rates.

Things aren’t much better for adjustable mortgage refinance rates. Bank of America is quoting 3.375% for their 5/1 ARM, a popular choice compared to 4.625% for 30-year fixed.

What Are You Getting With A 5/1 ARM?

What does that 5/1 Adjustable Rate Mortgage mean? The first number designate the fixed rate period. If you locked Bank of America’s 3.375% today your mortgage payment would be fixed for the first five years.

The second number is the frequency that the interest rate and your payment amount resets after the fixed rate period. With the 5/1 ARM your payment resets every calendar year after the five year fixed period.

Many loan officers are pushing 5/1 ARMS right now because they’re not closing much with fixed rate mortgage loans at 4.675%.

Rising Mortgage Rates Means Higher Payments

If you lock a 5/1 ARM today you might be happy with the 3.357% interest rate for the first five years, but when your ARM starts resetting you could be in for payment shock.

The point here is the mortgage payment you could have gotten two months ago is significantly lower compared to the fixed mortgage refinance rates you’re locking today. This higher payment makes it much more difficult to break even recouping your closing costs to the point where mortgage refinancing may not make sense.

The Mortgage Refinance Rule of Thumb

Should I refinance my mortgage? Will your payment go down enough to recoup your out-of-pocket expenses? The refinance rule of thumb used to state that you shouldn’t refinance unless mortgage refinance rates were 2% lower than what you’re currently paying. This rule is too broad and leaves a lot of cash on the table.

You can use a simple mortgage calculator like this one to approximate your breakeven point. Enter the mortgage refinance rates you’re being quoted and your desired term-length to calculate your new payment amount. The difference between your old payment and the new one is your monthly savings.

Simple Mortgage Calculator

Loan Amount: Years: Interest Rate:

Annual Taxes: Annual Insurance:

Monthly Payment =

Divide the amount you’re paying at closing by the amount you’re saving each month and you’ve got the number of months it’s going to take you to recoup your out-of-pocket expenses. If you break even in a reasonable amount of time, (reasonable is subjective for everyone) then paying for a new home loan probably makes sense.

If you do any amount of mortgage refinance rate shopping you’re going to find that lenders have quietly switched to quoting 5/1 or 7/1 ARMs. Why are they doing this? These rates seem more attractive than 30-year fixed mortgage refinance rates meaning they close more home loans.

Who wants to refinance at 5%? Unless there’s no other choice mortgage refinance rates on 5/1 ARMs are an attractive alternative.

How to Shop Smartly for Your Next Home Loan

If you’re considering refinancing with a 5/1 or 7/1 ARM over current 30-year mortgage refinance rates, you should consider the risk of payment shock five or seven years down the road. Most financial analysts are predicting mortgage rates will continue to rise over the next ten years which could leave you with payment shock and no way of lowering your payment.

While locking in 30-year fixed mortgage refinance rates doesn’t sound as good as it did two months ago, knowing that your payment won’t skyrocket in five short years could give you a lot of peace of mind.

Is your loan officer quoting you a 5/1 or 7/1 ARM because the rates are better? If so you might want to question their motivation. Do they have your best interest at heart or are simply looking for a commission at a time when many loan officers aren’t closing refinance loans.

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You can learn more about paying less closing on your next home loan from today’s best mortgage lenders by checking out my Underground Mortgage Videos.

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Fannie Mae Says The Party’s Over For Refinance Rates

Did you miss the boat on ultra-low refinance rates or can you still lower your payment and put some cash in your pocket? Are you kicking yourself for letting the refinance craze pass you by and are asking “Should I Refinance now that interest rates are going up?” Here are several tips to help you decide if refinancing with today’s best mortgage lenders is still worthwhile.

Mortgage Refinance Rates Are Going Up

The outlook for refinance rates in the coming months is just plain grim. Mortgage refinance rates for a 30-year fixed rate home loan inched over four percent, up from 3.5 percent last month.

Don’t panic just yet if you’ve been procrastinating yourself out of a better deal. You can still get a lower payment without paying unnecessary fees or discount points, but you’ve got to lock current refinance rates soon.

If you look at the big picture, historic refinance rates are still very low, just not as low as you could have locked them.

Fannie Mae Says Refinance Rates Not Likely Going Down

Fannie Mae’s chief economist, Douglas Duncan was quoted saying that the forecast for refinance rates in the coming months is not good. Mr. Duncan went on to say that if you can afford to lock at today’s refinance rates, “I would lock.”

If you’re floating refinance rates hoping to get a better deal the chances of catching the downside is highly unlikely. If you haven’t already had a conversation with your loan officer about locking in current refinance rates you might want to get that person on the phone quickly.

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