Every week, Freddie Mac releases their Prime Mortgage Market Survey (PMMS) based on a survey a mix of 125 lenders on what committed mortgage rates and points were during the previous week. Based on Freddie Mac’s report, the average rate for a 30 year fixed rate mortgage averaged 3.80 percent with an average 0.6 points. This is down from last week when it averaged 3.93 percent. A year ago at this time, the 30-year averaged 4.47 percent.
Freddie Mac’s Chief Economist Frank Notaft states: “The 30-year fixed mortgage rate dropped to its lowest point of 2014 this week. Mortgage rates fell along with 10-year Treasury yields, which closed at their lowest level since May 2013.”
The lower rates we are currently witnessing creates a great opportunity for home owners to refinance. However, in order to be able to capture a low mortgage interest rate, you must be able to move quickly as rates can and do change often.
Should you refinance?
You may be a good candidate to refinance if:
- If your mortgage rate is in the mid-4’s or higher; or
- You are currently payment mortgage insurance (private or FHA mortgage insurance); or
- You have an adjustable rate mortgage you would like to fix;
- You would like to shorten the term of your current mortgage;
- You have a second mortgage or HELOC that you wish to roll into one mortgage; or
- You would like to take equity from your home.
I highly recommend getting a detailed written rate quote from a local licensed loan officer along with an amortization schedule so you can review the proposed scenario to your current mortgage. There should be no cost to you for a quote, nor does the loan officer have to run your credit at this point. I am happy to help you review your current scenario to see if refinancing makes sense as long as your home is located anywhere in Washington state, where I’m licensed. Click here if I can provide you with a no-hassle rate quote.
Refinancing probably does not make sense if you do not plan on retaining your home long enough to break even on the cost to refi.
How can you lock in a low mortgage rate?
You need to be able to take action quickly. If you subscribe to my blog, you know that on Monday’s I share what may impact mortgage rates for the week and where current rates are for the 30 and 15 year fixed conventional. It’s sort of like my personal PMMS. You can get an idea of how rates change from week to week. In order to take advantage and lock in today’s low rates, you have to be ready to lock!
Here’s what I recommend:
- complete a loan application. Even if you are not quite ready to pull the trigger and lock, your lender is going to need to have a complete application from you before they can lock in your loan.
- allow the lender to run your credit. Again, the lender is going to need to know your actual credit scores as they are currently being reported as a majority of mortgage rates are impacted by what your credit score is. If there is an issue with your credit, your loan officer should be able to help provide advice on how to improve your score, if needed.
- start gathering supporting documentation that will be needed for your refinance. Once you lock in the rate, you will have a specific time period in which you will need to close the loan in order to avoid having to pay a lock extension fee.
- determine what rate/price you are aiming for and share information this with your loan officer. Try to be realistic. If you will save hundreds of dollars each month, it may be worth pulling the trigger and locking now verses losing the opportunity entirely when rates rise.
Keep in mind that lock desk may have certain hours. So if you are reviewing quotes provided to you first thing in the morning, and responding to the loan officer with permission to lock after 5 pm, you may have to wait until the next day (and the next day’s pricing) to lock. Mortgage rates and the pricing for that rate, may change throughout the day. It’s similar to the stock market. Be prepared to review and approve quotes for the locks as soon as they’re provided to you.
Again, this is a great opportunity to kick off 2015 by saving money and reducing your monthly cash flow. When you refinance, you will receive a refund of your existing escrow reserve account (taxes and insurance) from your current mortgage servicer in about 2-3 weeks after closing on the new loan. Speaking of your mortgage servicer, you do NOT have to go back to who you make your mortgage payments to for a refi.
If I can help you refinance (or purchase) your primary residence, vacation/second home, or investment property located anywhere in Washington state, please contact me!