The common refinancing mistakes

Every time you open up a new credit channel, you increase the chances to lower your credit scores. Lower credit scores translate to higher mortgage rates. While at times, it is difficult to put an estimate to the number of points you lose due to a newly opened credit account and inquiries versus the missed payments and maxed-out credit cards. According to a study by FICO, on average, the people with the best credit scores have not opened a new credit account in more than two years.

Do Not Jump on The Refinance Trend Too Late Well, a few weeks ago, we have seen an influx in the number of people opting to refinance, and if you are thinking along the same line, it may be already too late. With so many people rushing to refinance, lenders have been inundated by the demand, and the rates have risen.

“We are seeing a major influx of refi applications to capture lower

interest rates,” Nicole Rueth, a mortgage lender with Fairway Independent Mortgage Corporation, explains. And you’d think that it’s only the homeowners hoping to score a deal during the recession, plenty more are visiting the lenders to prepare for an uncertain future.

Most experts are reporting to have seen a rise in the number of homeowners leveraging equity with the cash-out refis, intending to secure their future during the ongoing COVID-19 emergency.

The Mortgage Bankers Association has also reported an increase in the number of refinancing applications up 79% and 479% Y-o-Y. And since the industry was unprepared for all these applications, many lenders were forced to hike up the rates to slow business.

“Mortgage rates move according to supply and demand and liquidity in the market,” Mike Zschunke, a real estate specialist in Arizona, says. “The more people that want to refinance or that apply for new mortgages, the higher the rates will go.”

Do not Forget About the Fee Factor Right now, it might be hard to get a reasonable refinance rate. However, that doesn’t mean that it is impossible to find a better rate than the one you have gotten. Yes, you have a reasonable rate, but that doesn’t mean you should run to refinance.

Remember that the refinance process comes at a cost. There are plenty of fees involved, and sometimes the fees can make your refinance costs even more than you’d hoped for. interest rate may be lower than their current interest rate, it may not make sense,” says Roger Ma, a certified financial planner. “They need to consider how much longer they’ll be staying or keeping their current place, the upfront closing costs involved, and the ongoing interest savings.”

The Future is Uncertain, Hold off from Refinancing There are so many reasons that would push you to refinance, however, if you are planning to tap into your home equity, say maybe to consolidate your debt to pay for home improvements or other expenses, this is a risk you don’t want to take.

“We should be concerned about people refinancing too much equity out of their homes and not being able to afford the mortgage payment,” says Odest Riley Jr. of WLM Financial. “This is especially the case if the COVID-19 virus causes any type of economic downturn, which could tighten up a homeowner’s ability to keep up with their financial obligations.”

I would urge you first to make that your new monthly payments will make sense if you opt to refinance. Also, keep in mind that the rates are not low for nothing. And given the uncertainty, nationally and internationally, I think it is worth playing safe for the time being.

To learn more about purchasing decisions during this time of uncertainty, make sure to connect with David Trubey of Keller Williams Realty. Since 2001 David has lived and worked in the beautiful city of Corona, California. He went to High School there, and he arrived as the new construction in the area was nearing completion. He grew up originally in Los Angeles and lived in the City of Norwalk, CA, for 17 years. He knows his area well. To learn more about David, go to; https://thepowerisnow.com/ vipagentsservices/david-c-trubey/

David C. Trubey Realtor Keller William Realty

Sources

https://www.hsh.com/finance/refinance/refinancemistakes.html https://www.realtor.com/advice/finance/refinancingmistakes-homeowners-are-at-risk-of-making-today/