Provided courtesy of: http://www.mortgagenewsdaily.com/consumer_rates/
There are too many counter-intuitive and frustrating developments in the mortgage market to comprehend all at one time, let alone discuss. That's not a cop-out as much as it is a favor I'm doing for you. If we tried to cover all of the nonsensical ground right here, this would become yet another wall of text in this era where they're all too common. So I'll try to make this pithy and interesting.
The bottom line is that mortgage rates are all over the place, depending on the lender and the loan program. Lender rates on the same program are farther apart than they've ever been. Day-to-day and intraday movements are huge and seemingly random. Whereas mortgage rates typically take a vast majority of their guidance from the trading levels in the mortgage bond market (95%+), the correlation is less than 50% right now. On many mornings (like today), mortgage bonds say rates should be lower, yet they were unequivocally higher for most lenders....(read more)
Depending on what you're looking at, when you look, and where you look, mortgage rates could either be amazing or terrible. Large, upstanding, secure, solvent, excellent lenders are as much as a full percentage point apart from one another on the same loan quote. That essentially NEVER happens in the mortgage market--not with all of those qualifiers anyway.
This is a symptom of the "mess" that coronavirus has made of the financial market. For those that want to pretend there's some unique mortgage-specific issue that makes things more difficult for the mortgage market versus other sectors, look around you. To whatever extent it's been "inconvenient" for the average 401k to lose more than 20% of its value in 3-4 weeks, the mortgage market has faced "inconveniences" on a similar scale. Compared to airlines, oil, retail, food service, and a laundry list of other sectors hit hard by COVID, the mortgage industry merely gets a participation trophy in this race to terrible....(read more)
There is a LOT of misinformation flying around out there about the mortgage market, the Fed, and the various impacts on rates from the government's coronavirus response. If you're in the market for big-picture overviews of all the relevant considerations with links to excruciating levels of technical detail, check out this compendium of the Fed's current mortgage bond buying efforts. If you're just here to find out what the heck is going on with mortgage rates, read on.
Rates are legitimately all over the place in a way we haven't seen, ever. I'm including a significant amount of personal experience analyzing the financial crisis and more than a careless amount of research into historically similar levels of volatility as seen in April 1987. March 2020 wins, period. The sudden, unexpected, massive economic shift associated with the most serious global pandemic of our lifetimes is a big deal. Could we say that the Spanish Flu or Great Depression were bigger deals? Sure, maybe. But those events happened in a different world. In fact, the rise of the internet and rampant globalization of the economy in the 90's arguably makes even 1987 a poor comparison (and yes, I know there technically was internet back then, but were you able to liquidate your 401k from your cell phone's mobile app after reading a coronavirus headline in the bathroom in 1987? Like I said... different world).
A refinance occurs when a business or person revises a payment schedule for repaying debt. Mechanically, the old loan is paid off and replaced with a new loan offering different terms. When a company refinances, it typically extends the maturity date. Companies or individuals refinancing loans may have to pay a penalty or fee.
BREAKING DOWN 'Refinance'
The most common forms of consumer debt are mortgages, car loans and student loans. The borrower agrees to make certain payments based on a rate of interest. Companies operate the same way. The most common types of corporate loans are term loans, bonds and lines of credit. The company agrees to the terms of each loan type, and the bank lends it money. Terms provide the details of the loan and specify the interest rate, payment amount and payment date(s).
When the terms of the loan are revised in a way that changes the payments associated with the loan, the loan has been refinanced. In a refinanced loan, the old loan is paid off with the new loan, and the old terms are replaced with new terms. Some loan terms come with fees associated with prepaying, which makes refinancing less rewarding. The most common changes in loan terms are maturity date and interest rate.
Borrowers refinance for a myriad of reasons. A common goal is to pay less interest over the life of the loan. Borrowers may also want to change the duration of the loan or switch from a fixed-rate to an adjustable-rate mortgage, or vice versa. The reasons and motivations behind refinancing a loan are as varied as the loan types offered.
Refinance Loan Types
There are several different types of refinancing options. The type of loan a borrower decides on is dependent on the needs of the borrower. The most common type of refinancing is called the rate-and-term. This occurs when the original loan is paid and replaced with a new loan. Another type of refinancing is the cash-out. Cash-outs are common when the underlying asset collateralizing the loan increases in value. The transaction involves withdrawing the value or equity in the asset in exchange for a higher amount. In other words, when an asset increases in value on paper, you can gain access to that value with a loan rather than selling it. This option increases the total loan amount but gives the borrower access to cash immediately while still maintaining ownership of the asset. Another refinancing option is referred to as the cash-in. The cash-in refinance allows the borrower to pay down the loan for a lower loan-to-value ratio or smaller loan payments.
Like many other Americans, you may be considering using the equity you've built in your home to re-invest in your dreams or consolidate debt. A mortgage refinance allows you to borrow additional money on your mortgage, so you can afford the things you've always wanted. It will also help save you money and help consolidate your debt into one convenient payment.
Mortgage refinance can prove beneficial in several ways:
We help you decide whether it is the right time for you to refinance. The decision to refinance should be carefully evaluated to avoid any complications at a later stage. By carefully studying the status of your current mortgage and comparing it to your income and other debts, we help you pick the refinance solution that best suits your current financial status.
We offer some of the lowest and most competitive mortgage refinance rates in the market. Regardless of your requirement, whether it is to consolidate existing mortgages or obtain a better rate, we get you the best deal possible. Our experienced mortgage professionals, who have extensive knowledge of the mortgage industry, will provide the necessary guidance that you need in making the right refinance decision.