Is It Too Late To Refinance?
2020 - would not recommend. Consider refinance - would recommend!
First of all it is never 'too late' to refinance if the variables are right. For example if you bought your home several years ago and you have been paying your mortgage every month you will now have equity in it. Or if you have seen increased sales prices in your neighborhood your home will most likely have 'appreciated' in value. What we have seen in 2020 is that the rates were already decreasing at the end of 2019 / start of 2020 and with the COVID-19 the rates have been VERY low the last 6 months.
It is also never 'too soon' to refinance. If you purchased your home last year, it is possible that a refinance with today’s rates would be financially beneficial for you. This summer and fall buyers locked their 30 year mortgages at rates as low as 2.5% - 2.75%, and many homeowners have taken this opportunity to refinance the mortgage on their home.
What is 'refinance'?
Refinancing means to re-set your mortgage rate and term to lower your monthly mortgage payment. It is possible to use the equity you have in your home as a result of what I mentioned above, to cover the cost of a refinance so you have ZERO cash out of pocket due at closing. You can also use the equity to take out a line of credit for home renovations or debt consolidation. But what many homeowners have done is simply taken advantage of the low rates.
But I have heard the rates are increasing again?
They may, but a significant change is not expected any time soon according to local Birmingham lender, Jennifer Strickland with Assurance Financial. - The rates are still historically low so it is STILL a great time to refinance at an amazing rate.* It can be smart to explore refinancing even if you bought your home in the last year!
Is refinancing free?
No, but the costs can be added to the loan if there is equity available to do so. A lender like Jennifer can help you determine if a lower rate and lower monthly payment make the cost of a refinance a good financial decision.
The main costs you will have to take into account when refinancing are: Lender/Underwriting fees, Origination fees, Attorney and Title, and mortgage recording. There will also be funds needed for setting up a new escrow account (property taxes and homeowners insurance), but you will also get any escrow funds at current lender refunded to you after closing.
And don’t forget about being able to SKIP a mortgage payment the first month after closing!
You can fill out Jennifer's application form HERE if you are purchasing or refinancing.
*Rates are based on down payment or total equity in home, debt to income ratio, and credit score.