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Last updated on February 3rd, 2021 at 12:06 pm
According to the Mortgage Bankers Association, mortgage applications rose 3.8% from the week before, in the last week of October.
Most of it is thanks to refinancing, which comprised of almost 69% of all mortgage applications during that time.
Beginning Dec. 1, 2020, there will be a new 0.5% fee attached on refinancing mortgages, which plays a big part of the reason why so many borrowers sought to refinance in late October.
Since it can take 30 days or more to close on a mortgage refinance, it makes sense that borrowers skip the fee and get their applications in.
Though many borrowers at this point, who have applied for refinancing won’t close their loans in time to avoid the upcoming fee, it could still pay to refinance.
While the Refinance rates aren’t as low as the rates for new purchase mortgages, yet they’re extremely competitive.
And if you’re not planning to sell your home in the near term, then a refinance could make a lot of sense, as it may allow you to save on your monthly outgo.
A few things to take care of to get the best advantage of refinancing:
- Borrowers with 700 and above credit scores would get the best deal. Pay off all your credit card outstanding and keep a check on any error on your credit report and get it corrected.
- When determining what refinance rate to offer you the lender considers your debt to income ratio. The lower that ratio, the better it is. Take care of outstanding debts like credit cards or personal loans.
The fact that a lot of homeowners rushed to refinance in late October isn’t surprising.
While it may be too late to avoid the 0.5% fees that will soon take effect, you can still benefit from major savings by changing your current mortgage for a new one with a lower interest rate.
Reference Source: The Ascent
