Should You Refinance Your Home In 2019?

how much are closing costs Should You Refinance Your Home In 2019?Did 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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5 Tricks You Need to Know For Lower Home Refinance Rates

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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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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Winning Refinance Rates Shopping Strategy

Are you shopping for best refinance rates for your next home loan? Common mortgage mistakes can turn your historically low refinance rates into an expensive mistake. Mortgage lender fees make or break the deal you’re getting. Here’s a winning strategy for paying less for the best refinance rates on your next home loan.

Lowering Your Refinance Rates Is About Winning

You might not think about it this way but it’s really you against the best mortgage lenders. They’re in business to make money. Your loan officer is working for their loan origination fee. The more you pay either of these the less benefit you’re getting from low refinance rates.

The problem with shopping for refinance rates from the best mortgage companies is that making an apples-to-apples comparison of interest rates and fees can be extremely difficult. If you follow these simple tips the process becomes much easier and useful.

Where to Start Shopping for Your Next Home Mortgage

Before you do anything else it’s important to start with your credit reports. Getting the best refinance rates depends almost entirely on your credit score and loan-to-value ratio. While there’s little you can do to improve your LTV in the short-term, there are steps you can take to significantly improve your credit score.

Have you already started shopping for refinance rates? If you’re finding the quotes you get are higher than what lenders are advertising the likely culprit is your credit score. Here’s how to fix that.

  1. Visit AnnualCreditReport.com
  2. This government-mandated website is responsible for providing you a free credit report from each of the three credit bureaus every year. It’s important to stay on top of the contents of these credit reports and make sure the information they hold is correct.

    If you find mistakes in your credit reports each of the reporting agencies (Equifax, Experian, & TransUnion) has an online process for disputing errors. Be sure and allow enough time for the correction to be reflected in your score.

  3. Use a Credit Monitoring Service
  4. AnnualCreditReport.com won’t give you a credit score unless you pay. An alternative to paying for your score is to subscribe to a credit monitoring service that alerts you anytime there are changes made to your credit reports. If you’re a credit union member most offer high-quality, low-cost credit monitoring services.

  5. Improve Your Credit Score
  6. Once you’re confident that the information in your credit reports is correct you can boost your credit score by paying down the balances on your credit cards below 30% of your limit. If you don’t have the cash to pay down the balances one strategy is to ask for a limit increase; however, avoid opening new accounts whenever possible.

How to Shop for the Best Refinance Rates

Once your credit score is the best it can be you’re ready to begin shopping for refinance rates. When you do this it’s important to protect your credit score from excessive lender inquires. When a mortgage lender runs credit to quote refinance rates your score will take a hit for the inquiry.

You can minimize the impact by limiting all of your refinance rate quotes to a two week period. When you do this you’ll only get dinged for one lender’s credit inquiry.

Some people think that by refusing to give loan officers their Social Security number when shopping for refinance rates they’re protecting their credit score. This is a bad idea because you’re relying on that person’s best guess for a mortgage quote which is usually a waste of everyone’s time. Always provide your SSN and pertinent financials to make sure you’re getting an accurate quote.

Shopping Smartly With Your Good Faith Estimate

The new Good Faith estimate is vastly superior to the old version if you use it correctly. The only way to use this document to make an apples-to-apples comparison of refinance rates and fees from today’s best mortgage lenders is to first choose a mortgage program and stick to it.

If you let a fast-talking loan officer quote refinance rates and fees across different programs you’ve already lost the battle.

Do you need 30-year fixed refinance rates? Are you looking for an FHA streamline refinance? Want to pay-off your home with 15-year refinance rates? That’s your program, stick with it.

How to Read Your Good Faith Estimate

The government did a great job simplifying this disclosure document. In order to use it effectively make sure the quotes you get are all from the same program and DO NOT include discount points. If you’d like to see how buying down your refinance rates affects your payment there is a table on page three of the Good Faith Estimate. For now you’re going to use page two for comparing refinance rates and things like the loan origination fee.

Start with box one on page two of your Good Faith Estimate. This is the loan origination fee paid to the person or company arranging your home loan. Many brokers will tell you that one percent is standard; however, I’ve reviewed community-based credit unions that charge as little as $400 for the loan origination fee. Remember the less you pay here the more benefit you’ll get from lower refinance rates.

Next, focus on the Yield Spread Premium found in box 2. For the uninitiated, Yield Spread Premium is a lender credit generated for accepting higher than necessary refinance rates. This credit is used to pay your loan origination fee and other closing costs. Is accepting higher refinance rates to pay your lender fees worthwhile? You can use a simple mortgage calculator like this one to determine if it’s a good idea.

Simple Mortgage Calculator

Loan Amount: Years: Mortgage Rate:

Annual Taxes: Annual Insurance:

Monthly Payment =

Finally, look at the fees found in Section B starting with box 3. The fees in box 3 are lender specific charges that may or may not include junk fees like loan processing. Box 6 lists required fees that you can shop around for a better deal. Comparing the fees listed in box 3 through six across different lenders can lead to a productive conversation with prospective loan officers.

If you find a loan officer getting impatient or even hostile at your questions regarding fees found on the Good Faith Estimate simply move on to the next lender.

Remember that the Good Faith Estimate is just an estimate and once you’ve found an offer you’ll need to reconcile every with the HUD-1 Settlement Statement before signing the contract.

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You can learn more about getting the best mortgage rates for your next home loan without paying unnecessary fees by checking out my free Underground Mortgage Videos.

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Here’s a quick sample to help you get the best refinance rates without paying unnecessary lender fees…

Keep Your Sanity & Protect Your Credit Shopping For Today’s Best Mortgage Lenders

Are you shopping for the lowest refinance rates from today’s best mortgage lenders and are concerned that too many credit inquiries could damage your credit score? According to the credit bureaus there’s a way to shop smartly for refinance rates without harming your credit score. Here are several tips to help you get the lowest refinance rates from today’s best mortgage lenders while keeping your sanity intact.

Refinance Rate Shopping & Your Credit Score

If you’re considering refinance your mortgage this year and haven’t checked your credit you’re leaving a lot of cash on the table. The only way to get the lowest refinance rates from today’s best mortgage lenders is to have the highest credit score you can manage.

If you’re already shopping for refinance rates and you’re finding the quotes you’re getting are higher than what lenders are advertising the likely culprit is your credit score.

The first thing you should do is visit the government mandated website AnnualCreditReport.com and check your three credit reports for errors. If you find mistakes each credit bureau has an online process for disputing errors and you’ll need to do this before allowing any mortgage lender to pull your credit.

How credit inquires damage your credit score

When a mortgage lender runs your credit they’re making a formal inquiry that stays with you. These inquiries can be found in the scoring category under “new credit.” This scoring category represents 10% of your overall credit score.

Applying for credit cards and loans can damage your credit score because the inquiry is a request to increase your overall debt. The more debt you have the more risk you are for defaulting on your loans. That’s why your credit score goes down when you apply for new credit, including mortgage loans.

How to manage multiple mortgage lender credit inquires

The most important thing you can do when shopping for refinance rates is put any major purchases on hold prior to refinancing. Avoid applying for credit cards or store charge accounts.

The credit bureaus categorize your inquires and some damage your credit score more than others. There are four categories of inquiries that you need to manage.

  1. Credit Inquires for Mortgage Loans
  2. Credit Inquires for Car Loans
  3. Credit Inquires for Credit Cards
  4. Credit Inquires for Store Charge or Personal Loans

Each of these four inquiry types is weighted differently when it comes to your credit score. Store charge cards for instance have the most negative impact of the four. Next on the bad list are your credit card applications. These have more of a negative impact on your credit score than home and car loans because the balances increase over time.

Never apply for credit cards at the same time you’re shopping for refinance mortgage rates.

How mortgage lender inquires affect your score

Depending on what your credit score is five points might seem like a little or a lot but that’s how much of a hit you’ll take when shopping for refinance rates. Here’s what you need to know to protect your credit.

The credit scoring model used by FICO (Fair, Isaac and Company) ranges from 300 to 850. The largest part of your credit score, 65% to be exact, is based on your payment history and how much you’re using.

The next 15 percent of your credit score comes from your overall credit history. This means the amount of time that you’ve been using credit, the duration of your history. The longer you’ve been using credit responsibly, the higher your score.

The following 10 percent comes from the types of credit you use. This is where car loans and home loans are a positive factor and store charge accounts are viewed as a negative. The last ten percent is the “new credit” category where inquiries are a factor.

Ten percent might not sound like much but that ten percent is 85 points, which could be hundreds of dollars in your mortgage payment. This is why managing your credit inquires is an important part of refinance rate shopping form today’s best mortgage lenders.

Having your mortgage lender run your credit is estimated by financial advisors to cost you 5 points on your credit score. You can limit the impact of shopping from multiple mortgage lenders by managing these inquires correctly.

How to shop today’s best mortgage lenders without dinging your credit

Shopping for the lowest refinance rates means you’re going to have to give up your social security number to get accurate quotes. There’s no way around taking a hit; however, you can minimize the impact by following these refinance rate shopping tips.

You won’t get penalized for refinance rate shopping if you limit credit inquires to a 14-day time period.

As long as your mortgage credit inquires fall into this time period you’ll only get hit for one inquiry. You can shop from as many mortgage lenders as you like as long as you do it within that 2 week period.

During this two week period make sure you’re providing a social security number to get accurate refinance rate quotes. You might be hesitant to provide your ssn to potential lenders; however, if you don’t the quotes you’re getting are either advertised rates or someone’s guess.

Correctly managing your credit score could mean as much as a full percent on your refinance rates which translates to hundreds of dollars on your payments, possibly even avoiding a denial.

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You can learn more about getting the most from today’s best mortgage lenders by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
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Here’s a quick sample to help you get the best refinance rates without overpaying…