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.
Over the holiday weekend, I was alerted by our automated mortgage monitoring system (which we like to call, “Approved-for-Life”), that a few of our past clients might be eligible for a refinance. Diversely, these loans were complete opposites, as one was a purchase mortgage that we did a few years ago, and the other was a refinance that we did a few months ago, but they both made it to the top of the rankings together nonetheless. We actually use several sophisticated systems to track and monitor our portfolio of loans regardless of whether the loans are still being serviced by Approved Funding, so it’s always nice to see how wide of a range we can detect for our clients benefit.
The reason these two alerts were so noteworthy in my mind was because I received almost the same reaction from both clients when I reached out to them. In both instances the client responded with “Are Interest Rates That Low?!” Regarding these two particular loans, one was a loan with Mortgage Insurance (which is an extra monthly payment whenever there is less than 20% equity on a loan) and the other was just a regular mortgage with a potential for refinance due to market movement.
Unfortunately, most homeowners and even home buyers are unaware that mortgage rates have now dipped to lows that we haven’t seen all year. As of this writing, the 10 year US treasury has broken beneath a difficult barrier of 2.10 that it hasn’t seen in quite some time. If the stock market can stay calm, and the 10yr UST remains at these important levels, a surge in financing can be expected.
As to some of the inner working of these two scenarios, interestingly, our services were also able to cross monitor potential increases in the home’s equity which can help remove the Mortgage Insurance (aka “PMI”) and make it eligible for a lower monthly payment. A typical PMI payment might be as high as $250-$300 on a $400,000 mortgage depending on credit score and loan to value. Our system can become aware of a potential to remove the PMI, whether that be through the loan principal reaching certain benchmarks, or sometimes through the increase in a home’s value because of market appreciation or the like. Obviously if someone does work to increase the value of their home, it should be brought to the attention of their lender to help expedite the removal of PMI even sooner.
The removal of a mortgage insurance fee is but one simple way that someone can reduce their mortgage payment, even if rates have not decreased. There are other very simple factors of consideration to consider at a time like this, when mortgage rates are on the decline. Similarly, in addition to a decrease in mortgage rates, home prices (and conversely home “equity”) are higher than they have been in almost a decade, which made it an ideal time to contact your neighborhood mortgage banker.
Are there credit card debts that have been incurring over the past few months or years, that could be consolidated into one new low mortgage payment? Is there a major home or life event that needs to be financed that would otherwise need creative or expensive solutions? Are there home renovations or projects that you have been deferring because of a lack of funds or understanding if they would bring value to your home?
Low rates do not only warrant an apples-to-apples comparison of what rate you have to what rate is available in the marketplace. There are a myriad of considerations to consider if financing or refinancing makes sense in your particular situation. Email me for a free no obligation report on “The 17 Reasons To Refinance Besides A Lower Rate”. Take advantage of what is sure to be a limited opportunity.
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