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The mortgage rate is historic lows at the moment?. It may seem like a good time to refinance your home, but do you need to hurry?
The Federal Housing Financing Agency has given Americans a reason to consider refinancing sooner rather than later: as of December 1, you’ll pay the 0.5% refinancing fee.
You will pay a refinancing fee if you lock your course on or after December 1st
If you refinance on or after December 1, you will pay 0.5% of the principal amount of the loan at closing. But as long as your refinanced mortgage is under $ 125,000, you don’t have to pay the fee.
You don’t actually need to close out your refinanced mortgage by December 1st to avoid being charged. Christian Wallace, Sales Manager at Better.com, said Business Insider, you can walk away from the fee as long as you do lock your stake until December 1. You can choose to block your rate once you are sure you want to refinance.
“Some people close the same day they apply,” Wallace said. “Or it could take days as they try to decide whether they want to refinance or not.”
The new refinancing fee is not the only fee you need to think about
Exceeding the December 1 deadline and blocking a low rate aren’t the only things you should consider before refinancing your home.
You don’t necessarily have to refinance with the same lender that gave you your original mortgage just because you are in a rush to refinance before December. You will want to find a lender who offers you a low rate and charge the least if possible.
Wallace recommended homeowners think all other refinancing fees, such as appraisal fees, credit check fees, and title fees. Not all lenders charge the same fees. Maybe you want ask several lenders for detailed schedule of fees so you can compare and compare before refinancing.
Take your time if your finances are not okay
Yes, the rates are low now. And yes, you will pay the refinancing fee from December 1st. But if your finances could do with some significant improvement, you may still want to hold back.
Lenders reward strong financial profiles with lower mortgage rates. If you have good creditworthiness, a low debt-to-income ratio, and / or a large down payment, you can get a low rate. But if you still have some work to do, you could pay a higher rate over the years – which could ultimately cost you more than the 0.5% refinancing fee.
If possible, try to increase your creditworthiness, pay off some of your debts, or save more on your down payment before December 1 for the lowest rate. You’ll probably want yours a credit score of at least 700 And yours a debt-to-income ratio of 36% or less. The amount needed for the down payment varies depending on the type of mortgage you getbut providing more than the minimum may result in a better bid.
If your finances are still not where you would like them to be by the end of November, it’s better to put it off until you’re ready. Waiting can save you money in the long run.