Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
The Federal Reserve came out with their major announcement noting that they will most likely not be raising their rates further in 2019. If you look back at some of my articles from a few months ago, that was indeed something that I was predicting and anticipating. The impact of their discussions and projections certainly had a quick effect on mortgage rates, helping them dip to lows of the year.
While they didn’t mention anything formally about a recession, all signs are pointing to an economic recession-like slowdown in 6-12 months. The Fed did have a significant announcement about the reinvestment of proceed-funds when treasuries are paid back Over the past few years, the Fed was the biggest buyer of mortgage-backed securities and long-term treasuries which helped keep the market stable and low.
As they have been known to do, they threw the market a “curve-ball.” They noted that they would continue to reinvest in Treasuries and bonds but not as they have in the past. Instead, they will do it in the shorter durations such as one year and three years versus the ten year and thirty years. All in all, these innovative and potentially preventive measures might mean that they see something that we don’t yet and they are trying to prevent a more significant economic slowdown which has caused interest rates to drop.
With lower rates abuzz, talks of refinancing and mortgage re-allocations have begun again. The preconceived notion is that it is only worthwhile to pursue a refinance if your rate is 1 or 2% less now than what you currently have on your existing mortgage. Those barometers are totally inapplicable these days. In a state like ours, and working with local lenders who have the resources to get deals closed quickly and efficiently, closing costs are relatively low compared to national averages. A refinance can be done for as little as two thousand dollars depending on your loan size. Furthermore, there are programs offered by certain lenders, which are indeed available at Approved Funding, that offer absolutely no closing costs whatsoever – making a refinance worthwhile at even a minimal rate saving.
With all the information available online about mortgages and interest rates, it still amazes me how much lost opportunity exists for people who don’t even contemplate refinancing because they assume it is not “worthwhile.” Statistically, millions of eligible mortgagors can benefit one way or another by refinancing their existing mortgage. Most people treat mortgage financing as a psychological conquest more than as a financial tool that should be utilized in tandem to one’s overall financial situation. When it comes to buying a house, taking advantage of these rates can equate to the buying power of a home that is $20,000 to $50,000 more than initially qualified for.
The bottom line is that mortgage rates for a 30-year mortgage have dropped. If your rate is above 4.00%, we should definitely be speaking. For anyone who has more than 10 years left on their mortgage; or for anyone who has credit card debts that are more than $200 a month in payment; or for anyone who doesn’t have an adequate reserve or retirement fund – now might be the time to revisit your options.
Refinancing is as much about your goals and objectives as it is about interest rate and market conditions. Rather than making sweeping assumptions about whether it makes sense or doesn’t make sense to refinance, it is advisable to carefully examine the current specifics of your situation before you can make that determination. Approved Funding offers a variety of proprietary and comprehensive analysis that can quickly show you the many variables of consideration so that you can make an accurate decision about all of the benefits of refinancing your mortgage.
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