Monday, August 19, 2013

When Should You Refinance Your Home Mortgage? Summer/Fall 2013 Update

Los Angeles Mortgage Broker, Bill Rayman, Offers Strategic Tips on Refinancing


Over the past few weeks, mortgage interest rates on 30 year fixed have jumped up around one percent (1% or), from 3.5% to 4.5%.  While 4.5% still represents an historic low for rates, some who may have been considering refinancing have pulled back.  While we have no data on the reasons some have chosen not to refinance at this time, we speculate that these reasons are most likely.
  1. Cost to refinance not worth the small reduction in interest rates
  2. Interest rates may go down again into low 4's or even back to 3.5%
  3. No rush.  Interest rates are likely to stay around 4.5% for at least all of 2013
  4. Belief that house doesn't have enough equity to qualify
  5. Belief that income or credit rating might get in the way of qualifying
These are all excellent issues to consider regarding moving forward on a decision to refinance.   This post will review each of these one-by-one.  However, the simple answer is this:  There is absolutely no cost, other than your time, to get a personal consultation on these issues that can help you determine if this might be the right time to revisit your mortgage.  You may be in a position to lower your monthly payment, make needed improvements on the property and keep payments roughly the same, or merely save thousands of dollars on interest over the next several years.

1.  Dropping even a half percentage point will save you $120 per month on a $400,000 loan or $1440 per year.  So the question of whether this is worth doing has more to do with how long you will be in the house that how much less of a rate you pay.  If you currently have a 5% loan and plan to be in the house for another 10 years, you should definitely consider refinancing.

If you think you will only be in the home for 5 years, you can refinance to a 3% ARM (adjustable rate mortgage) and save $360 per month on a $400,000 loan.  If you think you might stay for 10 years, a 3.25% ARM that is fixed for 7 years might be the right answer.  This is why a consultation can be so helpful.  Call Bill Rayman at 310-295-6213 for a no obligation consultation

2.  Interest rates might go back down or they might go up.  It is all in the hands of the Federal Reserve who is keeping rates artificially low.  If the Fed decides to remove some or all of its current asset purchase program, or even if the market believes they are going to, rates will go up.  Only if the economy collapses, is there much likelihood of the Fed increasing the stimulus in order to drive rates lower again.

3.  We don't make predictions on this blog, only offer the information from which you can draw your own conclusions.  The Fed is currently suggesting that they will begin to reduce their asset purchases this Fall of 2013.  This is exactly why the market moved interest rates up a full percentage point.  Therefore the market, as it most commonly does, has anticipated the Fed action.  This could mean that rates will stabilize for the balance of 2013.

4.  You may be quite surprise about the amount of equity your home has today.  Prices in Los Angeles are up 20% or more from this same time last year.  A consultation will help you to evaluate your chances of successfully refinancing your home or condo.  Call Bill Rayman at 310-295-6213 for a no obligation consultation

5.  You would be correct to assume that it is harder to qualify for a mortgage today than it was in the crazy 2000-2008 period.  However, some lenders are starting to loosen up their requirements again.  We know which lenders will fit your circumstances.  We also can help you determine which loan you are likely to qualify for.


New Contact Information for Bill Rayman

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025

424-354-5325

bill.rayman@guaranteedrate.com

1 comment:

  1. You would be correct to assume that it is harder to qualify for a mortgage today than it was in the crazy 2000-2008 period. However, some lenders are starting to loosen up their requirements again. We know which lenders will fit your circumstances. We also can help you determine which loan you are likely to qualify for.
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