Freddie Mac recently reported that its mortgage portfolio jumped by an impressive 12.9 percent year-over-year, including 42 percent growth to its refinance loans.
Single-family refinance loan volume is up from $13.8 billion in July to $21.7 billion last month, adding to Freddie Mac’s $2.275 trillion portfolio.
Those big numbers show that the real estate market continues to prosper and provides opportunity to individuals interested in updating and refinancing their home mortgages.
If you reside in the Seattle/Renton/Tacoma areas, and you’re thinking about taking advantage of a refinance, here are some misconceptions about the process we’d like to clear up so you can make an educated decision and potentially secure your financial freedom for years to come.
“I don’t qualify for a mortgage refinance.”
Toss your low financial self-esteem to the side.
In most cases, consumers are on stronger financial footing than they realize, yet so many pass up an opportunity to apply and see how well qualified they truly are.
Whether it’s incorrectly assuming their credit score isn’t high enough, or that the numbers simply don’t add up in their favor, it’s important to understand that a refinance is accessible and possible. It just starts with a little financial self-esteem.
“A slightly lower interest rate isn’t worth it.”
People may be too busy to realize that the lower interest rate, which may just be a quarter of a percent, is actually extremely helpful to their ability to save money.
A small decline in an interest rate, over the life of the loan, can add up to thousands upon thousands of dollars saved.
An extra $50-100 a month on saved mortgage payments goes a long way.
“Paying to refinance isn’t wise”
When borrowers decide to pay down their principal balance, they are doing two beneficial things.
A drop to their loan-to-value with a payment of say, $2,000, can have long-term benefits as homeowners recoup the investment with a lower interest rate.
Additionally, paying down the loan and reducing the loan balance, is like the borrower paying him or herself through increased home equity.
“Building up credit fast enough isn’t possible.”
It’s true that rates can go up and down at a moment’s notice.
So it’s natural for consumers to believe they do not have sufficient time to increase their scores in order to take advantage of favorable rates. The truth is that lenders offer rapid recourse that can correct credit issues that may have temporarily driven down credit scores, at no fault of the borrower.
Some mistakes or oversights on a borrower’s credit score can be quickly resolved, adding much-needed points to the credit score. This will give individuals plenty of time to apply and get approved for an incredible new rate.
“Getting one quote is enough.”
Consumers must shop around for the best deals, including refinance rates.
When borrowers decide to refinance their homes, they are not just shopping for a lower rate. They are also looking for solid service.
Learning more about rates and the type of customer service is vitally important so that borrowers can know what to expect and be well educated about their options.