Even in this period of COVID-19 problems, mortgage interest rates are extremely low. Many homeowners who don’t want to sell their Acton house and plan on staying where they are, have not chosen to refinance their mortgage. It’s true sometimes mortgage financing can be complicated at the beginning and getting all the way to a closing requires a good deal of documentation and paperwork. This can be time-consuming. On the other hand, the time you spend can truly be valuable to your long-term financial situation because the savings over a period of years really add up! Read on to learn a bit more.
According to Bankrate.com up to 18.5 million homeowners meet the criteria that most lenders would accept for a mortgage refinance, and most people could cut their interest rate by at least 3/4 of a percentage point. If you translate that into a typical mortgage on your Acton house, you may end up saving $300 a month or more in interest payments. If you multiply that by 20 years, your savings is $72,000! And you are building equity in your house faster as well.
Reason #1: I’m Not Happy with The Rate Quotes Acton Lenders Are Offering.
Most Acton homeowners should enjoy the benefits from refinancing their mortgage if they’ve held their present mortgage more than four or five years. Because interest rates are as low as they’ve ever been, you should be able to knock at least .75% off your current rate. If you don’t like the rates you’re getting from local banks, don’t be afraid to shop around some more. One of the first things you could do to refinance your Acton house is to talk to your current lender. Let them know you’ve been shopping around and that you will end up refinancing without them if they can’t give you their best rate.
Other Merrimack Valley homeowners might holding the line on a refi, waiting to see whether rates will go even lower. Most experts agree this is not a good strategy. Because rates are so low, it is really unlikely they will fall too much more. If you can begin saving right away it’s better to refinance now.
Reason #2 I Don’t Have Money for Closing Costs on A New Acton Loan
When you get a new loan, there definitely are some costs associated with the refinance process. Here’s a way to get a rough estimate of your costs; typically the cost will be somewhere between 2% and 5% of the total loan value. For example, if your Acton house will need a $350,000 loan, your closing cost will be somewhere between $7000 and $15000. Sounds like a lot right? If you don’t have the cash for closing costs—don’t let that scare you away from at least checking out a new mortgage. You should add up all the savings you’ll enjoy with a new lower monthly payment and will quickly realize you save a lot of money over the long term.
First of all, most of your closing costs can be rolled right into the new loan so you don’t have to take money out of your pocket. The other thing most people in Acton overlook is that at the time your new loan begins, you have at least one month where you don’t make a mortgage payment. This is the time between the end of your existing mortgage and your first payment on the newly refinanced loan.
Most lenders hold an escrow account for your town of Acton property taxes and the insurance on your house. Your new lender will want you to fund an escrow account, so they will ask for money upfront to pay those costs. But the important thing to remember is that you have money built up in your former lender’s escrow account, that will be refunded to you shortly after your new loan is put in place. This means in the end you’re likely to break even on all the out-of-pocket expenses you have.
If you truly are looking for a zero cost closing there are lenders out there offering that right now. But there is no free lunch as the saying goes, so zero cost closings mean many lenders will make your interest rate slightly higher. This can make your monthly payment a bit more expensive because everything was added to the new loan. However, your upfront costs are extremely low. And it really is worthwhile to be aggressive and ask your lender if they’ll waive some of the fees that are usually associated with the refinance process. This strategy may work best if you are approaching the lender who has your current mortgage or at a local Acton, MA bank where are banking now and have a good working relationship.
Reason #3: I’m Not Sure I qualify For a New Loan in Acton
If you have an existing mortgage and have been making your payments on time, most likely you are eligible to get a refinance loan. If you’ve had significant credit problems recently or a major change in your employment, then it is less likely a new loan will be easy to find. Because of the COVID-19 pandemic there are a good number of Acton homeowners whose credit score has taken a hit, but you can check out FHA mortgages as an alternative. These loans can be more forgiving and have looser qualifying standards.
If, in fact you have lost your job or have another serious financial problem due to COVID-19 you should make contact with your present lender about their forbearance options. The current forbearance measures have been letting Acton homeowners temporarily stop making monthly payments, and down the road when things improve they can explore refinancing again.
• Make sure you shop around for a new mortgage on your Acton home. Most lenders will be happy to give you a quote and more than likely try to give you offers that can work. The fastest way to do this would perhaps work with a mortgage broker who represents many lenders instead of just a single bank.
• Make sure you know your credit score ahead of time. The stronger your score the more likely you are the lender will give you the absolute lowest possible interest rate.
• If the money it cost upfront to get a refinance is an issue for you, try to see if you can wrap those costs into the new loan. It may be a little bit more expensive but because of the savings in interest over the life of your loan it’s likely that it could still be worth it. Do a little math and you just may save a whole lot!
Summit Buys Houses is an experienced Acton Massachusetts home buyer. If refinancing is really not in the cards, you may benefit greatly from choosing a direct sale to us. We do not ask you to fix it your house or do any of the cleaning. You can leave it as dirty as you want because we see past that to the true potential of the home. We will handle all of the details, making the selling process as simple as possible for you. Sell your house in the Massachusetts area to us and pay no commissions, no closings costs of fees of any kind. Feel free to give us or call at (978) 254-3800 or fill in the simple form below.
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