This morning Freddie Mac released their weekly Prime Mortgage Market Survey report with a title that I couldn’t agree with more: “Lower-than-expected mortgage rates offer refinance opportunity“.
The DOW is getting hit hard again today. As I write this (10:16 am PST), the Dow is down 446! Bad news for the stock market equals good news for mortgage interest rates. Investors are seeking safety by pulling funds from stocks and investing in bonds, like mortgage backed securities.
The Prime Mortgage Market Survey reports that last week, the 30 year fixed averaged 3.92 percent with an average 0.6 point. The week prior, the reported average was 3.97 percent. A drop in rate of 0.05%.
The process of getting a mortgage consists of several stages and typically takes anywhere from 30 – 45 days (or more) depending on how prepared you are, what mortgage program you have selected and if it’s a purchase, the closing date may dictate how long the process will take. With this post, I’m focusing on the steps involved with obtaining a refinance (aka refi) which are slightly different than the process when you are buying a home.
The steps below may not take place in the exact order I have listed and some steps may happen simultaneously. In addition, some lenders may have different procedures with how they process a mortgage.
It’s no secret the the Puget Sound region has been experiencing a very hot real estate market… so hot in fact that it may be causing some home buyers to feel a little burned from competing with multiple offers as well as renters contending with rapidly rising rents. Recently KOMO 4 News shared that that Seattle currently has the nations hottest housing market. This is not only good news for those who are wanting to sell their homes, it’s also good news for home owners who may benefit from a refinance.
Earlier this week, Director of the FHFA, Mel Watts announced that HARP (the Home Affordable Refinance Program) will be extended for one more year. From his prepared remarks:
“The HARP program allows borrowers, including those who are underwater on their mortgage and who are regularly making their mortgage payments, to refinance their loans to take advantage of historically low interest rates.
$372 is the average monthly savings that my clients who have closed on their refi’s so far in March. With higher appraised values, thanks to the hot real estate market driving up home prices, many clients are also eliminating mortgage insurance with their refi.
In today’s competitive housing market, we are seeing more buyers using “all cash” to purchase their homes. Delayed financing allows home buyers who pay cash for a home to obtain cash out, using a refinance, without it being priced or treated as a “cash out” refi. A “cash-out” refi has stricter requirements, including having to wait 6 months after closing before being able to refi, lower loan to value requirements and “cash out” refi’s have higher pricing than a “rate term” refi. Delayed financing allows home owners to recoup the cash used to purchase the home at current rates and terms as a “rate-term” refi.