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IS IT TIME TO REFINANCE?

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July 7, 2019 – Article in the Chicago Tribune by Natalie Campisi bankrate.com

These are the highlights:

The average interest for 30-year-fixed-rate mortgages is hovering below 4%, ushering the way for millions more homeowners to save money by refinancing.

The recent drop in rates means that 5.9 million people can potentially save money by refinancing their existing home loans and securing a lower rate – 2 million more than in May, according to a new report by Black Knight. The combined savings totals $1.6 billion.

Why Your Credit Score, Income and Debt Matter:

Applying for refinance is similar to getting a mortgage in that lenders will consider your FICO score, debt-to-income ratio and employment history when evaluating your application. Your interest rate is a reflection of your financial situation, and banks tend to reward low-risk customers with better rates.

Borrowers want to aim for a credit score of over 740 and a loan-to-value ratio of 75% or under to nail down the best rates, says Melissa Cohn, Executive Vice President at Family First Funding in Toms River, New Jersey.

The Best Scenarios for Refinancing:

Make sure refinancing bolsters your bottom line. Expensive lender fees can actually put you in the red if you decide to refinance and the savings don’t out-weigh the expense.

Generally, you need a drop in the rates of 0.5% to 1% (depending on the monthly savings and the closing costs) to justify doing a refinance. The rule of thumb is that the savings should be enough to recoup the closing costs within about 18 months to make a refinance justifiable.

For more information call Joan Eslinger 815-791-5875.

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