There has been a 0.03% increase in the mortgage rates when compared with those of last week. This has created urgency in many homeowners to look for refinance options. Home-buyers who are yet to lock their rates are now rushing with their mortgage applications.
“The financial panic that Brexit had created seems to have finally subsided. The increase in the mortgage rates might continue for a while now,” says Michele Velez, producing branch manager at Supreme Lending in San Mateo, California. “The drop in the mortgage rates was quite significant when Brexit hit.”
As per the reports of Mortgage Bankers Association, the lower mortgage rates caused a 14.2% surge in the number or mortgage applications submitted in June 2016. However, July saw a 3% decrease in the volume of new mortgage applications.
“In spite of the slow-down of the rush to refinance, home-owners should still find out if they can benefit by going for refinancing,” says Velez. “There are many mortgage experts out there whom they can consult for a mortgage review. This can be quite beneficial for many.”
Refinance can be beneficial for homeowners who have owned their homes for a long period of time and who wish to do away with their PMI (Private Mortgage insurance). Homeowners who are on a variable-rate mortgage can also take advantage of refinance and change their mortgage to a fixed-rate one. For those who are looking at reducing their term, this could be just the right option.
Although refinancing comes with a lot of benefits, it is in the interest of home owners to consult mortgage experts before jumping into an option. The costs related to refinancing are to be considered independent of the difference in the mortgage rates, to estimate the exact amount a home owner can manage to save.
Homeowners need to understand the basic difference between the two types of refinancing before choosing a refinance option. The first option is a rate-and-term refinancing option that homeowners can choose if they wish to refinance the remaining balance of their existing mortgage at a lower rate or a lesser term. The main objective that this option serves is to save money on the monthly mortgage payment. The second refinancing option that homeowners can consider is cash-out refinancing. In this option, a home-owner can apply for a larger mortgage than his existing one, take out the difference in cash and use this cash to close his existing mortgage. The remaining amount can also be used to increase the equity of the home by making improvements. However, it is up to the home owners which option they want to go with depending upon the amount of money they can save.
As per the reports of Mortgage Bankers Association, the 0.03% rise in the mortgage rates this week has caused a 15% decrease in the refinance index when compared to the previous week. As a result, the applications for mortgage refinance also reduced to a 61.1% from the 64.2% of the previous week. Yet, there is still hope for refinancing if homeowners feel that it could benefit them.