It’s a Great Time to Refinance

by Tom Tousignant

in Blog, Mortgage Rates, Wealth Building

Many home owners in Charlotte and North Carolina are discovering it’s a great time to refinance their home loan.  With the unusually low rates of the past few weeks, we’ve helped homeowners:

  • Shorten their mortgage term to 10 or 15 years without increasing their payment
  • Save several hundred dollars each month in interest
  • Convert from interest only loans to amortizing loans without increasing their payments
  • Pay off credit cards, car loans, second mortgages and lower payments overall by several hundred dollars

Should you look into refinancing?  Yes, if:

  • If you are employed, or have been self-employed for more than 2 years
  • have an interest rate over 5.75% on any loan
  • Have an Adjustable Rate or an interest only loan
  • There is equity in your house and you have better uses for that wealth – like paying for education, paying off other debts, or re-building retirement accounts

What are the pitfalls?

Number one:  Appraisals. Since the HVCC, or Home Valuation Code of Conduct was forced on consumers last year, appraisers have been reducing home values across the country with impunity.  This ill-conceived regulation is the biggest roadblock – for some, just a speed bump, but for others, a dead end.  Unfortunately, the only way to find out a true appraisal value is with the actual appraisal that your lender orders for you.

As a safety valve, we recently started offering an AVM or Automated Valuation service on our branch website.  This $29.95 service will give you an educated guess if your house will appraise adequately for refinancing.  If you get an AVM here, and then refinance your mortgage with us, we will refund the cost of the AVM at closing.

Number Two: Credit Score. If you don’t have a 740 or higher middle credit score, you can expect to get a slightly higher rate than other with high scores.  Fannie Mae started charging borrowers higher fees for lower credit scores.  If you call, we can get you a free copy of your report and will tell you how much impact, if any, the score has on your rate.

If you don’t ask, the answer is no.  If you own a house, and have a rate higher than 5.5% right now, you owe it to yourself to look into refinancing now while rates are this low.

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