Whether a person is looking at buying or refinancing their home, the fact is that mortgage rates are at or near record lows. The reasons include a combination of issues, including federal bank interest rate compression, the fears engendered by the threat of the Coronavirus, and weak bank systems across the world.
The first step in making the right choice is to understand how the rate market works. Mortgages almost always are part of bond packages, which are traded in financial markets. Investors in those bonds get a rate of return based on whether those instruments rise or fall, and home mortgage rates generally mirror those patterns. In contrast to the regular stock market, bonds rally on negative outlooks for the economy, meaning mortgage rates drop. When positive economic news arises, bonds sell, which means mortgage rates increase.
When someone decides on a lending institution to handle their transaction, it’s important for them to analyze the fees associated with the loan. You will be charged for standard things such as a credit report, appraisal, underwriting as well as title and escrow fees. You may also pay to reduce your interest rate.
There are positives in paying for points, but only if it involves helping to reduce your mortgage rate. Generally, an individual should pay one point (the equivalent of one percent of your loan) in order to receive a decrease in rate of .25 percent. By doing that, the person can pay off the point in four years and begin saving from that point on, but its best to discuss any type savings strategy with your lender.
Make sure to submit an application with a lender to buy or refinance in order to lock in the best rate. If simply refinancing, contact the lender now to lock in rates while they are at all-time lows. Buyers should remember they can’t lock in a rate until they’re in contract to buy a property, but the lender can determine the best time for that move.
Historically right now may be the best time to refinance your home as interest rates are at all time lows. Once you’ve made the decision to refinance, call Lakeside Title for a fast, accurate and compliant closing. We are here to serve you and make that transaction a breeze!