Managing Your Mortgage Options

The year 2020 had the record for the highest volume in mortgages due primarily to record low interest rates. Refinancing is making up roughly 70% of all mortgage transactions and it is a very busy purchase market as well. Sometimes refinances are necessary and other times it’s just a matter of convenience with interest rates being as low as they are.  Let’s take a look at some quick tips that you should consider whether you’re buying, selling, or refinancing in 2021.

  1. The Best Time to Refinance

Sometimes life takes precedence and refinances are necessary for both personal and financial reasons.  Other times it’s just a matter of convenience but here is a decent rule of thumb. If you can save at least three quarters of a percent, you should consider refinancing. Whether you need money or not from a refinance, three quarters of a percent can be a significant enough to save in a rate to help offset closing costs on a new loan or potentially save you money sooner depending on amount due upon the closing of a new loan.

  1. The Two Types of Refinance Options

There are two types of refinance options: rate and term refinance and cash out.

The rate and term refinance will either shorten your term or cut your rate.

The cash out, which is very popular right now, is a great option if you have other debts and your interest rate is above three plus percent. The cash out option is a great way of getting back on track financially and getting rid of personal debt such as credit card debt, which can be toxic to your credit and financial goals.

  1. Work with Someone Local

The mortgage industry is overwhelmed with tons of applications right now!  Try to work with someone local, reputable, who you’ve heard of or who you’ve done business with in the past. Reach out to a realtor who you trust and have them refer you to someone or a financial advisor; someone who has a viewpoint into the business. This is such a commoditized business and it’s important to work with somebody who you can trust and then trust them to get the job done correctly.  A lot of last-minute closing table mistakes can happen to consumers so don’t just go for the headline rates you see on the internet!

  1. Fixed Rates or Variable Rates

With rates where they are today, a fixed rate might be a better option if you decide to refinance. Sometimes the variable rates are higher than the fixed rates. Other times, when there is a small deviation that it would be silly to give away the fixed rate option for the variable rate. Again, this is where working with someone who you trust can pay dividends when you’re looking at your mortgage options.

If you are unsure about managing your mortgage options, consider talking with a financial advisor at Financial Dynamics & Associates, Inc. As a firm focused on these issues in the Midlothian and Richmond, VA metro area, we may be able to help advise you based on your overall financial situation and goals.

This information is not intended as a solicitation or an offer to buy or sell any security or investment product. Advisory Services offered through J.W. Cole Advisors, Inc (JWCA). Financial Dynamics & Associates Inc. and JWCA are unaffiliated entities.