According to a weekly poll by the Association of Mortgage Lenders, Mortgage applications are high and most of them come from people looking to get refinance.
A trend that Sr. Loan Officer Richard Camp of the American Financial Network noticed thanks to the current interest rates.
“After 11 years, I can tell you where the rates are today, the lowest they have ever been,” said Camp, who recently refinanced his Rockwall home.
“We were at 4,875 and we were able to refinance that loan and reduce it to 2,625, which was about a 45% reduction in our interest payments,” Camp said of his home.
He said they see interest rates in the 2% range and said that this has never been the case before.
“So the low prices are not only attractive to home buyers, they also help people who already have a home they love. Especially in these uncertain times, cut your payments by between $ 300 and $ 500, ”said Camp.
“Mortgage rates continue to hit record lows this fall. The 30-year mortgage rate was largely unchanged at 3.01 percent last week, but 15-year fixed rate, FHA and jumbo rates all fell a new MBA survey lows, “said Joel Kan, associate vice president of Economic and Industry Forecasting at MBA, in a press release
According to the Associated press, Freddie Mac reports that the average interest rate on a 30-year loan fell to 2.78%, down from 2.81% last week. The average 15-year fixed-rate mortgage remained at around 2.32%
This has boosted the demand for refinancing, but experts said it was important for homeowners to be careful about the length of their new loan.
“A common mistake people make is that after five years of their 30 year loan, they refinance into another 30 year loan. So if you think about it, you have effectively a 35 year loan, ”explains Sriram Villupuram, Associate Professor of Finance and Real Estate at the University of Texas at Arlington.
“What people need to consider is that in a scenario like today, where interest rates have dropped quite a bit, I can turn my 25-year balance into a 15-year loan? That is, keep my monthly payments, but finish the loan in another 15 instead of 25. So if I have the ability to pay, why do I want to extend the loan for so long and pay the interest forever? So that’s a mistake people make, “said Villupuram.
“I’d say get a loan officer to work out your numbers. Everyone has a scenario, everyone has an amount to save, but also want to make sure what is your ultimate goal? How long do you plan to stay in the house? Are you planning to pay off the house sooner or lower your total payment? ”Explained Lager.
“I think refinancing is a great opportunity, not just on the home mortgage side, but also for business owners who have commercial property, be it home or investment. This is a perfect opportunity to cut back on that payment and save thousands of dollars, “said Rafael Kreklau, who is a commercial real estate lender and who recently refinanced his home.
“This is the best time to refinance when someone has a higher interest rate than I would say 3%,” said Krekalu.
Brittany Obert, who lives at The Colony with her husband and two young children, also benefited from the latest tariffs. They bought their home three years ago at a rate of around 4.25% to 4.5%, but recently they have lowered that number.
“Now we’re at 3% refinancing with no cash to close, we actually had some money that came from being able to save, not having to pay any of those months, that was about $ 3,000, we were able to buy new furniture or pay off other debts, “explains Obert.