While the world continues to battle the COVID-19 pandemic and the economy struggles to regain its pre-pandemic status, the housing market is increasing in strength. Interest rates have been lower than ever, therefore one thing should be on every American homeowner’s mind: refinancing.
Refinancing in America: October 2020
The pandemic has a multitude of homeowners taking out new mortgages and refinancing their mortgages. However not all Americans are pursuing this option.
According to mortgage data firm Black Knight, 19.3 million million homeowners could save a vast amount of money just by simply refinancing their mortgage. This is because the interest rates are at historic lows. Therefore, many Americans who currently have 30 year mortgages with interest rates at 4 or 5 percent could refinance their mortgage, receive a lowerinterest rate, and end up saving money in the long run.
Why are some Americans not Refinancing?
The simple answer to why most people do not refinance their mortgage is because it is not a fun process. In order to properly refinance your mortgage, you need to compile a few sets of documents including bank statements, tax returns, paychecks, and a few others. During this pandemic, people may just simply not have the time or have larger concerns to worry about.
The other reason that Americans give for not refinancing their mortgage is that they are waiting for lower interest rates. However, this is a huge gamble. Therefore, we urge all Americans to take advantage of the current historically low interest rates right now.
How to Begin and go through the process of Refinancing:
Before you begin the process of refinancing, you must determine your goals. Therefore, ask yourself these questions:
- Are you looking to just lower your payment?
- Are you looking for a short term loan or a long term loan?
- Do you have the means to pay monthly?
- What is your credit score?
- What is the market value of your property?
- How long do you want to keep the loan?
- Do you have current employment?
These questions are essential in order to come to a final decision on whether to refinance. For example, if you only have a few years remaining on your mortgage, refinancing may not make sense for you because of the high costs associated with refinancing. Refinancing comes at a high cost, thus you may end up spending more in costs than the actual savings you incur from the process of refinancing.
After running through our suggested questions, if you decide to move forward in the process of refinancing your mortgage, you should consider the following steps:
- Shop around with different lenders for the best rates. Do not just settle upon the first lender. Negotiate with them and get the best possible deal for yourself.
- Ensure you have a high credit score. If you have a low one, start to be mindful of it. Pay your bills on time and build up your score.
- Do a cost-benefit analysis. Ensure that any savings you incur from your monthly payments after refinancing, outweigh any costs associated with the pursuit of refinancing your mortgage.
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The ultimate decision to hire an attorney for the process of refinancing is left to the discretion of the homeowner. Most homeowners do not pursue legal help. However, keep in mind that you should have an attorney review all documents associated with refinancing a mortgage to ensure they are all in accordance with the law. If the cost of an attorney is dissuading you from procuring an attorney, look no further than JUSTLAW. We provide extremely affordable, quick, and efficient legal services and would be more than happy to help you in your pursuit of refinancing your mortgage. Good luck!