Mortgage rates and re-financing: a few things you might need to know

by | Sep 4, 2021 | Albuquerque Real Estate Talk | 0 comments

Mortgage rates and re-financing: a few things you might need to know

(Transcript Snippet): “Tracy:

Tego, we were talking about mortgage rates and refinancing.

Tego:

Well, there’s a couple things. Let me just, so there’s a company that I, that I watched that, that monitors all the mortgage and the mortgage industry, or basically the, actually the mortgage payment part of it is, you know, what’s going on with mortgage payments. So they’re looking at forbearance and delinquencies and all that stuff. Another thing they look at is how many homeowners that have a mortgage could benefit by refinancing, right? Meaning basically save money every month, but you know, maybe even take some equity out, you know, take some cash out. But this is really this particular status. Just if you refinance based on what your current mortgage rate is, if you would benefit financially. And, and the thing that’s surprising is there’s 12 million, according to their analysis in the country, people with mortgages that could benefit by refinancing

Tracy:

12 million. So that means their monthly payment would go down because they’re going from one interest rate to a lower interest rate.

Tego:

Correct. So that’s something that I see all the time and I’m like, wow, that’s really interesting, because think about all that nested basically wasted money in all those homes.

Tracy:

So just for clarity, refinancing does involve a fee. And what a lot of people don’t realize is if you’re not going to be in that home for another year and a half or two years, don’t refinance because you’ll spend more to, to close on the new interest rate than you would gain in those 18 months or so.

Tego:

So you can expect to pay one to 2% of the loan amount of the loan amount to refinance your home. So you have to calculate, but there’s a ton of calculators online that just, you know, should I refinance yeah.

Tracy:

And I wouldn’t use those though. Cause they they’re all trying to get your business.

Tego:

Well, I was going to say that next is all these calculators and stuff. They’re great use them, but don’t sign up for anything. Or you are going to get bombarded by refinance lenders trying to sell you.

Tracy:

Tego knows that firsthand. That’s why he’s smirking for those of you that

Tracy:

Can see them. Yeah.

Tracy:

So, so Tego one of the things that I thought was just mind blowing, but then I went, no, it’s really not is how many people that have a mortgage that don’t know what their current interest rate is.

Tego:

Right. And so that was the story that popped up the other day. And it was like, it was a bank rate, did a study and they found it 38% of mortgage holder do not know what their mortgage interest rate is.

Tracy:

So that would be me because you take care of paying our mortgage. I mean, I generally know

Tego:

Somebody asked me, what’s your mortgage rate. I’d go. I think about it’s just under three is what I would say. Right. Cause we refinanced and I think we got to 2.8, seven, five or something. So I mean, I, I generally know.

Tracy:

Well we asked some really good friends who are in real estate related business about two weeks ago. And we asked them about their interest rate and they were in the high fours and we were like, why aren’t you refinancing? And they said, well, because we keep thinking, we want to move somewhere more remote. And so we aren’t and then like, that makes sense. That makes sense. Yeah, for sure. I don’t think they’re really going to move anytime soon, but that’s okay. That’s, they’ve got a real reason. At least they’ve made a decision. Right?

Tego:

Other side of that, I’ve heard of people that are refinanced like multiple times in the same year. And I’m like, why would you do that? Because you know, that’s, that’s expensive. And a lot of times that’s tacking extra basically cost onto your home, right? Reducing your, your monthly payment. Anyway, you just, you got to look at all the numbers is point. So, but anyway, the thing is, there’s a lot of people that don’t know that they could benefit by refinancing. And yeah,

Tracy:

If you’re one of those that is listening and you have a mortgage and you don’t know, check it out. And if your rate is like four or higher,

Tego:

The general rule, and again, this is very thumbnail rule, but if you can save 1%, so mortgage rates are, you know, 3% plus or minus right now, right in that right around three. So if you’re four plus maybe even 3 75 plus and you’re going to stay in your home at least let’s say 18 months, let’s say two years. So 1% in two years is, is the general rule,

Tracy:

Right? If you’re going to be in your home more than that length of time, and you can save about 1% on your interest rate, you’ll have paid yourself back the cost to refinance in that 18 months to two years plus saved money.

Tego:

Yeah, for sure. And, and just on that, you know, the whole question of, you know, what are mortgage rates going to do? It doesn’t look like they’re going to change much.

Tracy:

Did you get your crystal Ball out?

Tego:

I got my crystal ball out. I did it. Yeah. Yeah.

Tracy:

We don’t expect it to change much at least between now and the next four or five months.