I have had some clients pay cash for a home for various reasons to expedite the purchase or to make the most competitive offer. They then plan to get a mortgage soon after the purchase to recoup a portion of their cash. And it used to be that if owned a property free and clear that you had to wait a least a half a year to be able to get cash back out of the home. But now there is an exception to that rule.
Blog Category: refinancing
I had a potential client approach me about a possible refinance. They said they had been getting fliers and phone calls saying they were eligible for low, low rates for a refinancing. Hmmmm, low, low rates? She said she thought she was unable to refinance. I asked two questions and knew she was unable to refinance. She had no equity in order to refinance, and a crazy story!
Did The Coronavirus Make Mortgage Rates Go Down? Did the Federal Reserve Just Cut Mortgage Rates To 0%?
Mortgage rates did indeed go down after the Coronavirus spread and financial markets started to panic. But the Coronavirus and mortgage rates aren’t directly connected.
People considering a refinance continue to contact me for low rates, but now that rates have spiked it may no longer makes sense.
What do you do in order to remind yourself of things? Tie a string around your finger? Use a paper day planner? Do you use a software or online calendar? How about just using my blog instead!? I hear of many people getting sold a refinance instead of making sure they are doing it for the right reasons. Below are some good notes to remember when thinking of refinancing.
Anyone that reads my blog knows that in general I am not a fan of Interest Only (IO) loans. I have said before that an IO loan is like putting your mortgage on a credit card. But on a refinance it may make sense for a few reasons. If you have already built a lot of equity it may make sense. And if you are more interested in savings than equity building. And if you know you are not going to live in the property forever so have no interest in getting the mortgage paid off.
There is always another bus, right? So why not wait for the next one? I am not sure I agree. The next bus may be broken down, or out of gas, or delayed beyond a comfortable waiting period. But I am not talking about a bus, I am talking about a refinance. I hear rates are going down 1% a week, and soon banks will be giving away money for free. Do not refinance now because mortgages will be free soon if you wait. And if you wait long enough, banks will even pay you to take a mortgage. Is this true? Come on! You know my sense of sarcasm. No, it is not true. But
Going dark on your salesperson. All salespeople have experienced this, no matter how good. You educate a potential client, you spend hours and hours with them answering questions, you create a relationship, and you truly seek to help them to earn your commission. And then it happens, they go dark. No contact. No return calls. No email reply. No nothing. It is eerie. You start to wonder what you did wrong.
Mortgage pipelines are backlogged thanks to record low rates. And rates simply keep breaking new records. This has created delays for many consumers trying to take advantage of low mortgage rates by refinancing. Customers of big banks report that they are unable to get a call back. One bank told a client that they would return the client’s call in 2-3 months!
I frequently have people ask me for “one of those no-cost refi’s”. Some people think that mortgage lenders are so hard up for business that they are willing to lose money and simply pay the closing costs for the mortgage borrower. I don’t know of any businesses where losing money is part of the process of making money. A no-cost refi actually comes with a cost…a higher interest rate.
The reality is that a no-cost refi is one where the closing costs are built into a higher interest rate.
Time To Refinance To A 15 Year Mortgage And Save Money? Is it time to refinance and save money? Maybe. I have a lot of clients who call me with 30 year fixed-rate mortgages and think that just because interest rates have dropped a lot they are going to switch to a 15 year mortgage and keep their payments the same, and cut a lot of years off of their mortgage. This is likely not going to happen. Take a look
When refinancing consider your life of loan costs. Refinancing doesn’t save you money unless you calculate in the interest that you’ve already paid. Especially when you think you’ll own the house for the long haul or forever. If you pay $2,500 a month in principal and interest, you are going to pay $900,000 over the life of a 30-year mortgage. If you are 4 years into the loan and are going to refinance to a principal and interest payment of $2,800 you are going to save $200 a month, correct? Wrong!