Provided courtesy of: http://www.mortgagenewsdaily.com/consumer_rates/
Mortgage rates hit their best levels in 6 months yesterday, but moved higher today following a strong report on the services sector.
The economy is one of the key inputs for interest rates. As such, several of the most relevant economic reports have a longstanding history of causing day-to-day volatility. Today's ISM Non-Manufacturing Index is one of a handful of the most important reports. By coming out much stronger than expected, it suggested the economy was closer to a level that would prompt the Fed to make changes to rate-friendly policies. Bonds reacted with lower prices and higher yields (aka "rates").
Of course we're only talking about only one economic report. A few short hours earlier, another important report, ADP Employment, missed by a longshot. A few days ago, ISM's own manufacturing index suggested the post-covid economic growth was leveling off....(read more)
Mortgage rates moved slightly lower again today--extending a steady string of improvements that began after last week's Fed announcement. The average lender is now able to quote conventional 30yr fixed rates that are at least as low as those seen in the middle of July. In most cases, today's offerings are slightly better.
The details can vary quite a bit depending on the scenario (purchase/refi, credit, downpayment, etc), but best-case scenarios have been back in the "high 2's" for weeks. In almost all cases, today's rates are the lowest since the beginning of February.
What's up with the refreshingly strong move back toward all-time lows?...(read more)
"Taper talk" refers to comments, speeches, or official policy communications from the Federal Reserve (aka "the Fed") that speak to the timing and nature of a reduction in the Fed's bond buying activities. Wow! What a boring and potentially confusing sentence! Let's try again...
The Fed buys bonds--US Treasuries and mortgage backed bonds (which, in turn, serve as the foundation for mortgage rate pricing). This helps rates move or remain low. When markets think the Fed is going to stop buying bonds, rates are at risk of moving higher.
The current bond buying efforts began as a response to the pandemic. They helped stabilize the financial system and they provided "accommodation" (a boost to overall economic activity intended to support the Fed's goals on inflation and job growth). As the pandemic grew more manageable and especially as the economy has come back online, the Fed has increasingly discussed winding down (or "tapering") the bond buying programs....(read more)
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.