Mortgage Rates Up-Refinance or Purchase?- giving you some things to think about…
Mortgage rates started lower but ended a little higher after the inflation data per Mortgage Daily News as of yesterday, 06-13-23. What happened?
Average rates of yesterday’s re Bank Rate per Forbes Advisor; indicated that rates dropped. However, the refinance rate for a 30-year refinance was indicated at 7.000% and a 15 yr. was at 6.71%. These are trends/average rates and not quotes. Different lenders have different rates and that is why you should always check with various originators of loans.
*Please see current purchase rate trends on the right side of the page.
According to the IMF’s most recent January 2023 update, global inflation is forecast to decline to 6.6% for 2023. The US inflation rate is projected to fall to 4.1% in May 2023 and the Cleveland Fed’s nowcast suggests month-on-month inflation will come in at 0.19% and core inflation will be 0.45%. This is reported by Visual Capital, Trade Economics, Forbes, and more.
Lenders Who Offer No-Cost Loans
It appears from research that some lenders are still offering no-cost refinances. To be very honest – remember I have been not only an underwriter but also a loan officer. There is actually not an instance when a lender makes no money. They would not stay in business if they did. All institutions, banks, etc. must have a profit to exist.
However, when rates are fluctuating, they may offer you a slightly higher interest rate, and make their money on what is called the back end. The cost is added to your loan amount actually.
Yes, I have done the same thing. We all do, that is how loan officers make money, either on the front or the back end. It is customary to make some money on any mortgage loan you originate.
How Should You View This?
This depends upon your financial situation in some aspects. If you do not want to add the closing/fees to the principal balance and do not want to pay the cost at closing; this can be a great option for any borrower.
If you are adamant about getting the best rate regardless, then you just have to check with different lenders or discuss it with your present lender.
If you are just looking to refinance and stay at the same principal balance or near, ask for the best rate available at the time.
Should You Refinance Your Current Mortgage?
These are a few questions most lenders should ask you to consider…
- Will this refinance lower your payment substantially?
- Can you lower your interest rate by at least 2%, and/or lower the term?
- Will this refinance help you to lower the loan to value to eliminate mortgage insurance (MIP -if applicable)?
- Are you seeking a limited cash-out refinance?
- Do you desire to get cash out to do renovation, pay off debts, etc.?
Please note that if you seek to get a cash-out refinance, your interest rate is going to be higher than the purchase rates, or if you are a rate/term refinance.
Purchase Transaction
If you are seeking to purchase a home, think wisely, shop around, and get the best terms available. What to consider depends again upon your personal financial situation.
Here are some things to consider… while the rates are at their present state…
- Can you qualify for a lower term than the 30-year term? Would you want to?
- Do you have sufficient verified funds to pay your mortgage down to 80% loan to value? This eliminates mortgage insurance and lowers your payment amount as well if it is a monthly premium.
- You can actually buy a larger home if you desire and qualify for the higher loan amount. The most important question is, should you?
The Normal Question When Considering a Purchase Remain The Same
- Is this the right time for your overall financial position?
- Do you have income/job stability?
- Have you saved for your downpayment and closing cost?
- Do you have good credit?
- Are you considering not only the present economic situation but also the economic changes that could occur? Can you still make your mortgage payment with ease should the economy change?
There are predictions that it will in 2023.
Some Sound Advice:
• Make sure you are ready to take the leap of faith whether it is to refinance your current home or purchase a new one. It is always wise to stay within your budget (you do have one).
• Shop for the right home, and make sure you get a home inspection if you are purchasing an older home.
• Also, try to stay within the limits of the housing prices within the neighborhood. If you purchase the highest-priced home within the neighborhood, it could mean selling it later could be an issue if housing prices go down again.
• Makes sure you speak with an educated realtor who is familiar with the housing area you are interested in. These professionals will guide you in the best direction (or should), and help keep you in line with your limitations or expectations.
Most lenders are accepting applications online these days. Especially since the Coronavirus captivated the USA. Get all of your credit records together, W-2s, tax returns (if needed), paystubs, and bank statements/investment accounts. Calculate your income, and expenses and know upfront how much you can apply for.
Other News
With the average piece of news, you may be getting all negative about our country. You can’t let what you cannot do anything about hinder your progress in life. Stay Positive! 👌
