Most mortgage offerings in the marketplace today at or sub 3 percent come with varying rates fees and in the form of points. Most mortgage borrowers are otherwise not accustomed to not paying points. It’s an old school methodology that hasn’t really been utilized in years. It boils down to a cost-benefit, how much cost in exchange for how much benefit should be on your radar when securing mortgage loan financing. How quickly it’s going to take you to recapture that money? What’s the interest differential you’re gaining on the new loan vs the loan you have?
So, if you’re looking at rates anywhere in the mid-twos or anything really under three on a 30-year fixed-rate mortgage it’s probably realistic that you’re going to have to pay some form of points to attain the historically low rate. Now you might be saying to yourself “Gosh that’s a lot of money,” (for example, 1.25 in points that are $5,000 plus the title and escrow fees on a $500k loan for example). Take the approach this may be the last mortgage loan you will ever need. You will more probably never have to refinance your mortgage ever again in your lifetime. Begin the decision with the understanding this is the loan then the wheels start to turn.
People are going from mid three mortgages with PMI, paying off home equity lines of credit, paying off junk debt and getting virtually untouchable interest rates and the opportunity can literally be several hundred dollars per month. Several hundred dollars in savings per month can go a long way to getting ahead financially.
What to expect- refinancing takes time anywhere from 45- 60 days is realistic. Expect to provide the same paperwork probably two and three times in the process. Please remember when you’re looking for mortgage responsiveness is also key. Providing the condition, the lender needs on your loan without resistance is critical. Doing so will allow your loan to move effortlessly through the mortgage company system you’re working with as well as allow you to scoop up an interest rate you’ll be able to enjoy for many more years to come.
Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at www.sonomacountymortgages.com.