by: Gaye Jones ~ AnnieMac Home Mortgage
I assume most of you are getting solicited to refinance your current mortgage as rates continue to drop. Refinancing, many times, can be beneficial, but you need to make sure that it is in your benefit to do so.
If you purchased a home between late 2017 and spring of 2019 with FHA or VA financing, you most likely can lower your rate with the Streamline Refinance Programs. The Streamline is a Non-Credit Qualifying and No Appraisal Mortgage. Limited documents so you won’t need to spend time collecting stacks of documents to qualify. The general rule is that you must have made 6 payments before you are eligible, and the interest rate must be a minimum of ½% lower than your current rate. I am finding that most times we can lower the rate by more than ½%. On most FHA refinances the combination of the Mortgage Insurance refund, a lender credit & escrow advance will cover your closing costs. For VA refinances we must show that you will recover the cost of refinance within 36 months through your lower payment.
There are many reasons when refinance makes good financial sense. If you have enough equity to remove the monthly mortgage insurance, if you want to cash out and pay off high interest loans, if you have a 2nd mortgage and want to combine the two, taking an ARM loan and converting to a fixed rate or simply lowering your payment. You also skip a month’s payment and that can help some establish a savings account or emergency fund.
For those homeowners that expect to sell their home within the next three years it is rarely beneficial to refinance.
Whether buying or refinancing it’s always best to get a referral to an experienced local loan originator that you trust, there are lenders out there that will refinance your loan regardless of whether it’s in your best interest.