With mortgage rates below 4% since May 2019, you would think that most people would have already refinanced but according to a recent Lending Tree survey, 49% of homeowners say they are considering a mortgage refinance in the next year. The report estimated that over a third of homeowners are have mortgages above 4% and 11% didn’t know what their rate was.
Slightly more than a third of the people surveyed regretted missing the opportunity to refinance in 2020 when rates did hit their historical low. Homeowners should not beat themselves up on this issue because the only way to know to tell that it hit bottom is after it has started going up again.
The current rates are very favorable to borrowers and some economists believe that when inflation is factored in, the rates are close to zero effectively.
While there are nine specific reasons people choose to refinance their homes, two are among the most prevalent: to lower the payment or take cash out of the equity. Most reasons include:
There are some commonly held myths about refinancing among homeowners such as:
If your current mortgage is a FHA, there is limited borrower credit documentation and underwriting program. The mortgage must be current and not delinquent, and the refinance must result in a net tangible benefit to the borrower such as a lower rate, lower payment or better terms. For more information, see Streamline or contact an FHA approved lender.
VA has a similar program if your existing mortgage is a VA-backed home loan. The purpose is for a borrower to reduce their payments or make their payment more stable. They must certify they are currently living in or did live in the home covered by the loan. The Interest Rate Reduction Refinance Loan, IRRRL, may be available.
USDA also has a program for current USDA direct and guaranteed rural homebuyers who have been current on their payments for 12 months prior to requesting the loan refinance. No appraisal or credit review is required. There must be a minimum of 40% net reduction to the PITI payment. More information is available.
Before refinancing your home, determine how long you plan to keep the home. If the reason for refinancing is to save interest by getting a lower rate, you may accomplish that immediately. However, if you plan on selling soon, you may not be able to recapture the cost of refinancing.
There are costs associated with refinancing regardless of whether you pay for them in cash, or they are rolled into the cost of the mortgage. These costs can range from two to five percent of the mortgage.
Call me at 971-337-9396 and I’ll refer you to a trusted advisor.
The latest Existing Home Sales Report from The National Association of Realtors (NAR) shows the inventory of houses for sale is still astonishingly low, sitting at just a 2-month supply at the current sales pace.
Historically, a 6-month supply is necessary for a ‘normal’ or ‘neutral’ market in which there are enough homes available for active buyers (See graph below):When the supply of houses for sale is as low as it is right now, it’s much harder for buyers to find homes to purchase. As a result, competition among purchasers rises and more bidding wars take place, making it essential for buyers to submit very attractive offers.
As this happens, home prices rise and sellers are in the best position to negotiate deals that meet their ideal terms. If you put your house on the market while so few homes are available to buy, it will likely get a lot of attention from hopeful buyers.
Today, there are many buyers who are ready, willing, and able to purchase a home. Low mortgage rates and a year filled with unique changes have prompted buyers to think differently about where they live – and they’re taking action. The supply of homes for sale is not keeping up with this high demand, making now the optimal time to sell your house.
Home prices are appreciating in today’s sellers’ market. Making your home available over the coming weeks will give you the most exposure to buyers who will actively compete against each other to purchase it.
Since 2013, the National Association of REALTORS® has produced the Home Buyers and Sellers Generational Trends Report. This report provides insights into differences and similarities across generations of home buyers and sellers. The home buyer and seller data is taken from the annual Profile of Home Buyers and Sellers.
Millennial buyers 22 to 30 years (Younger Millennials) and buyers 31 to 40 years (Older Millennials) continue to make up the largest share of home buyers at 37%: Older Millennials at 23% and Younger Millennials at 14% of the share of home buyers. Millennials have been the largest share of buyers since the 2014 report. Buyers 41 to 55 (Gen Xers) consisted of 24% of recent home buyers. This group continues to be the highest earning home buyers with a median income of $113,300 in 2019. For the report, buyers 56 to 65 (Younger Baby Boomers) and buyers 66 to 74 (Older Baby Boomers) were broken into two separate categories as they have differing demographics and buying behaviors. Buyers 56 to 65 consisted of 18% of recent buyers and buyers 66 to 74 consisted of 14% of recent buyers. Buyers 75 to 95 (The Silent Generation) represented the smallest share of buyers at 5%.
All generations of buyers continued to utilize a real estate agent or broker as their top resource to help them buy and sell their home.