Millions of buyers rush to take advantage of the historically low-interest rates caused by the coronavirus epidemic. The increasing number of mortgage refinances is causing delays. Refinances typically take between 30 and 48 days. However, your application may take six to eight weeks to be processed.
It’s important to act quickly to get the best rates. You should not rush to apply for a mortgage refinance after December 1, 2020. This adverse market fee will be applied to all mortgage refinances submitted after that date.
The Federal Reserve has announced that interest rates will likely remain at 0% for the foreseeable future. This is in addition to the Federal Reserve’s announcement that rates would be kept near 0% through 2023. You have enough time to speak to multiple lenders and review multiple offers before you make a decision.
Is it better for you to refinance with the current lender or not?
Refinances with the same mortgage lender are not always better. It could be tempting to go with your current lender and not look at other lenders if you like them. It saves you the time and hassle of switching mortgage companies, filling in additional documents, or learning new processes.
However, a decision made solely based on convenience can be costly.
Your current lender’s main focus is likely to retain you, but this doesn’t mean that they will offer you the best deal. If you are happy to accept their lower rate, your existing lender might offer you a lower rate than what you have.
Do you need to go to another mortgage lender?
Many new lenders are competing for your business. They are likely to offer you better incentives when refinancing. Although your lender may be the best, it is worth comparing rates from at least three lenders.
While you may spend more time getting quotes from lenders to save money on your loan, it could be worth the extra time.
How can I get the lowest rate?
You have control over what type of mortgage rates are available to you as a consumer. Although you cannot control the market, there are three things you can do to get the best rates.
Compare rates and lenders
You can choose a shorter-term loan
Credit score improvement
1. Compare rates and lenders
Checking out multiple lenders is one of the best ways to save money on your mortgage refinance. Many factors can save you thousands of dollars, such as the differences in interest rates and fees between different companies and locations. It is worth speaking to multiple companies or negotiating terms for your first choice.
2. You can choose a shorter-term loan
Because borrowers are less likely to default on their loans, lenders offer lower rates for borrowers who choose shorter-term loans. According to Freddie Mac, the average fixed rate 30-year loan is 2.67% and the average fixed rate 15-year loan is 2.17% at publication. Although your monthly payments will be more, you can save thousands of dollars by paying off your loan faster.
3. Improve your credit score
High credit scores and a good credit history are eligible for the highest interest rates. Your credit score can be improved by paying off your debts on time and correcting any errors in your credit report.
You can include monthly payments such as utilities and your mobile phone bill to your credit report if you have recently paid off your debt. You can improve your credit score by making these extra monthly payments on time.
Consider other costs
When refinancing your mortgage, keep in mind that it is equivalent to taking out a new loan. This new loan has fees. Refinances are typically charged by lenders at 1%. All new refinances will be subject to an adverse market fee, which is 0.5%. All refinances above $125,000 are subject to this fee.
Refinances up to $300,000.00 will cost $4,500. To calculate your monthly expenses and the time it will take to make your refinance payment, you can use an online calculator.