October 17, 2019
Is now the right time to commit to a refinancing loan? Opinions may vary, but consumer trends seem to indicate that many of today’s home owners believe the answer is yes.
The monthly Ellie Mae Origination Insight Report provides lenders and consumers with mortgage loan data and insights; the September 2019 report includes data suggesting that nearly half (49%) of the loans originated in the time range covered in the report were refinance loans.
Interest rates have been at historic lows, home values have also been on the rise, and many want to consider their options while rate trends are still in a borrower-friendly mode.
If you are ready to refinance, the first step for many is determining what kind of refinance loan you need. If you just want a lower interest rate, there is an FHA refi loan for that. If you need out of an adjustable rate mortgage, there’s an FHA refinance loan for that, too.
But sometimes borrowers are torn between refinancing to get cash back to pay for any number of needs, and putting the same expenses on a credit card instead.
If a borrower is considering a major renovation project on the home and is planning to stay in that home for the long-term, a refinance loan may make more sense than putting those expenses on a credit card with comparatively higher interest rates.
Interest rates are low at the time of this writing. Those who refinance now may or may not be able to ride out the current trend of low rates without losing too much ground.
But if you aren’t ready to commit to the loan at the present time due to a need to fix credit problems, get more time on the job, save up for closing costs, or any other reason, it’s best not to worry about the current interest rate trends.
They won’t harm or help you until you get much closer to being able to commit to the loan and fill out the application.
If you are not sure whether you’re ready for a refinance loan, the following list can help you determine what’s best in the short term. Ask yourself:
- Have I checked my credit report in the last three months?
- Do I know my FICO scores?
- Have I made any late or missed payments in the last 12-24 months?
- Do I know how much I am currently paying for principal and interest on my current home loan?
- How much do I have saved for closing costs?
- What ARE the closing costs for the type of refinance loan I need?
- Do I have a fixed rate mortgage or an adjustable rate loan?
- Does my current lender have the ability to give me a better deal or should I shop around for a new lender?
The answers to these questions are very important–if you don’t know them, you may not be ready for an FHA mortgage or refinance loan just yet.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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