The pandemic shut down the economy, but the silver lining for some is that it pushed rates down to their lowest level in nearly 50 years prompting families to flood lenders with requests for home refinancing.
In the last few days, several benchmark mortgage refinance rates trended upwards, but they remain low by historical standards, which is why loan experts say you should at least consider locking in a new rate and locking down huge savings.
"My lender called me and said you’re gonna want to take advantage of this," said Jennifer Amolsch.
Amolsch would normally pass on a home refinance, that is until the deal became too good to pass up.
"We dropped over a percentage, a whole percentage, so it was a large change for us," Amolsch said.
The Woodhaven homeowner dropped her rate from 4 1/2% to 3.3%.
"We’re saving almost $100 a month, so that’s a lot," Amolsch said. "We can put that away and maybe take a vacation at the end of the year."
Homeowners across metro Detroit are rushing to refinance at record low rates so good that loan officers like Crystal France of Summit Funding are working around the clock to keep up with demand by those worried they’ll miss out.
"What we’re seeing today, may not be here tomorrow." France said. "In today’s market, the rates could change in an hour."
The benefits of a home refi are vast. It could lower your monthly payments, shorten the life of the loan, or eliminate your private mortgage insurance and depending on your current rate, the benefits more than likely outweigh the transactional costs.
But what if you go ahead and move forward with the refi and then they do go down? What's recommended for that person?
"There’s no reason to wait," said Brad Donnelly. "If they do happen to get lower in the future, you can take advantage of it again."
Brad Donnelly with Level One Bank says you can refinance your mortgage as many times as it makes financial sense to do so. What’s important to remember is that you need to shop around. Rates will vary by lender, so you’ll want to compare offerings from two or three different banks.
"The one thing I would warn people against is having their credit run multiple times, because that could impact their credit score in the future," Donnelly said.
Millions of people will stand to benefit from refinancing. That said, it may not be for you.
Here’s the Rebound Rundown on when not to refinance
- If you’re unsure whether you want to stay in your home
- If you have a plan in place to sell within a few years
- If the best rate you can lock in is just a fraction of a percentage point lower than what you’re currently paying
Something else you’ll have to consider: the Federal Housing Finance Agency announced last week that it would be raising fees on loans to .5%. On average, that’s roughly $1,400 per housing loan. The adjustment is expected to begin in September. So talk to a lender to find out if it still financially makes sense for you.
