Mortgage rates have become lower than ever. As of the first half of September, the average rates on 15-year and 30-year fixed mortgages went down to 2.56% and 3.06% respectively. Analysts predict that mortgage rates will continue to decline for a while longer as COVID-19 sweeps through the United States.
As a result, many borrowers have decided to refinance and save hundreds of dollars from their monthly payments. At present, more than 2.3 million households have already decided to refinance their mortgages back in April, May, and June.
It is not too late. Black Knight, a mortgage data firm, says that 19.3 million homeowners would benefit from refinancing this year. Together, they can save up to $5.8 billion monthly.
Not everyone is qualified to get savings by refinancing. It is a case-to-case basis. Many will see benefits from it, but some may spend more in the long run. Refinancing, of course, comes with its own fees. It would not come cheap.
However, if you are a good candidate for refinancing, you may be asking yourself: should you stay with your current lender, or should you with the offer of other mortgage companies? Which one makes more financial sense?
Here are some benefits of switching lenders when you refinance your mortgage this year.
You Might Get Lower Mortgage Rates
Your goal is to get a better deal that will save you money. It is only natural that you go with the lender that will offer you the lowest rate possible.
You would think that your current lender would give you a more favorable deal. After all, you have a history with them. They know that you pay the money you owe on time and you have never missed a payment.
However, other lenders may have something better. You do not want to miss out on lower rates because of loyalty.
Shop around and find the best mortgage rate available to you.
You Can Get Rid of an Inconsiderate Lender
Not all lenders want the best for borrowers. Some take advantage of a borrower’s need for money or inexperience and ask for more than what’s necessary. Others appear responsive at first, but become difficult to contact later on.
If you are having a negative experience with your current lender, take this as an opportunity to switch to a company that cares about its clients.
Although looking for and negotiating with another lender can be a long and tiring process, you would not have to deal with bad customer service in the future or a needlessly complicated payment process.
You can save money and get rid of a bad lender at the same time. You would be hitting two birds with one stone!
How do you find a mortgage lender that cares about you? Look at how they treat you and read reviews from previous customers online. These would help you make a decision that benefits you in the long run.
You Can Get a Lower Closing Cost
The closing cost for mortgages goes for upward of $1,000. If you can get a lower mortgage rate from a lender that is also offering lower closing costs, then you should go for it.
More Expensive Refinancing Fee Soon
Refinancing should be a decision that you really have to think about. Jumping into it without weighing the pros and cons would be disastrous for your finances.
However, if you want to do it and you really believe that it would save you a lot of money, then you may want to start refinancing your mortgage now. Come December, the fees that you would have to cough up will significantly increase.
Fannie May and Freddie Mac, the two biggest players in the market, announced this year that it will impose an adverse market fee to lenders and homeowners who are in the process of refinancing will be expected to pay at least some of the extra expense.
The adverse market fee is fixed at 0.5% of your mortgage. Borrowers may see themselves paying over a thousand dollars more in addition to closing costs and other fees associated with refinancing.
The fee was originally meant to be implemented this month, but it was pushed to December 1 to allow the industry to prepare.
The present low mortgage rates should encourage you to check whether you are qualified for refinancing or if you would get huge savings from it. Although acting now would allow you to take advantage of the market, you should never rush the decision.