Accunet loan consultants Tim Holdmann and David Wickert go over the most recent jobs report, follow-up on their latest client stories, and discuss the ins and outs of refinancing a home.
This week’s highlights:
- There is some upward pressure on interest rates following speculated developments in the US-China trade war.
- More often than not, home sale contingencies can be the “kiss of death” on home offers. But, as a client recently showed us, not always.
- Recently, David read an article discussing 5 things you should know before refinancing — and we walk you through them one-by-one.
5 things to consider before refinancingRates are low, meaning refinancing is a great idea. That being said, there are certain things you should think about before you get started. David recently read an article from Business Insider titled, “Refinancing my mortgage lowered my monthly payment by $200, but I wish I’d known 5 things beforehand.” And, while we don’t agree with everything on the list, it’s definitely worth expanding on from a mortgage lender’s perspective. #1: You’re not locked into your mortgage interest rate. This is kind of, sort of, true. When you get a mortgage, you’re locked into the interest rate of that mortgage — that doesn’t mean you can’t get a new mortgage, though. That’s essentially what a refinance does; Refinancing is a great way to get out of your current mortgage, and into a better one. #2: Your private mortgage insurance (PMI) can significantly decrease when you refinance. It’s definitely possible to lower (or get rid of) your PMI when you refinance, but it’s not a guarantee. If you get a lower interest rate AND lower or get rid of your PMI, that’s a double-whammy. #3: An appraisal amount won’t necessarily be the same as your home’s market value. The appraiser is just going off of what similar sales have looked like. The value of your home is what someone is willing to pay you for it — period. #4: Your loan amount can actually go up. The phrasing on this point was a little misleading, but it’s technically true. If there are costs associated with the loan, you can include those things in your mortgage payment. Most people do, but you’re definitely not obligated to. #5: You might not want to refinance if you plan to move soon. You can get a no-cost refinance, but they’re not always available. Sometimes, a refinance is an investment. If you’re planning to move, make sure you can at least break even from the costs of a refinance, and the savings you gain from it before you move.
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The October jobs report, trade war updates, and the future of mortgage ratesThe Labor Department released its October 2019 jobs report on Nov. 1, 2019, and it was better than expected. In the month of October, the U.S. added 128,000 jobs. And, while the unemployment rate rose a little bit to 3.6%, this is still better than anticipated. Journalists and economists are tending to view this jobs report as justification for the Federal Reserve’s actions, which may or may not hold water. (Reminder: The Federal Reserve recently cut rates again to help the economy stay strong.) This report came the same week as more developments on the trade war front; The Chinese government came out Thursday saying they have a deal to roll back the tariffs on the US as phase one of a trade agreement. Now, neither the White House or US trade representatives have corroborated this, but it’s still largely viewed as good news.
How closely is all this related to interest rates?The US Treasury, Federal Reserve and mortgage rates are all definitely related — but they’re more like distant cousins. They impact each other, but not directly. That being said, this is all definitely putting upward pressure on interest rates. Rates have been down, in part, because of the trade war, so any positive development will probably impact rates somehow.
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