Does Refinancing Now Make Fiscal Sense?

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While interest rates are at historic lows, does it make the most sense to refinance? Many people around the country are taken with the great rates, but are left in a state of wonderment as to what these low rates actually mean to them.

It's important to realize that although it can lower monthly payments and shave years off of total repayment (thus reducing overall interest paid), the cons of refinancing can actually outweigh the pros, especially when the balance remains above $350,000. Number crunching is essential when considering essentially another, new 30 or 15-year mortgage loan.

Be sure to read the full Washington Post article here>>

FHA to Cut Mortgage Insurance Premiums, Caliber Home Loans Predict Boom of Homebuyers in 2015

CapitolIn an effort to expand homeownership among lower-income buyers, President Barack Obama cut mortgage-insurance premiums charged by the Federal Housing Administration (FHA) in an announcement according to Bloomberg News.

“Lowering the annual mortgage insurance fee from 1.35% down to .85% will be a significant boom for both first-time homebuyers and current homeowners that want to refinance their FHA loans,” says Keith Lashley, Mortgage Banker with Caliber Home Loans and Preferred Lender for Realogics Sotheby’s International Realty.  “Prospective homebuyers are urged to take advantage of the lowest interest rates in over a year.  Factoring in the rising median home prices and positive economic trends, I’d say this is about the most confident time to buy in recent memory.”

Lashley breaks down the changes like this.  Mortgage insurance on a $400,000 loan currently costs a homeowner $450 per month but will drop down to $283 per month under the reduced premium providing a $166 per month savings to homeowners financed through FHA.

Under the new premium structure FHA estimates that 250,000 additional first-time homebuyers will be able to enter the market due to the reduce premium and over 2 million  borrowers will save an average of $900 annually over the next three years if they purchase or refinance homes.

2015 is quickly shaping up to be a blockbuster year in real estate according to Lashley.  He says homebuyers can take advantage of incredibly low interest rates, less restrictive FHA underwriting guidelines and now lower mortgage insurance to leverage their purchasing power all at the same time. He also warns that an increase of more homebuyers could make the marketplace even more competitive for buyers.

These favorable factors coupled with fast rising rents are not lost on first time homebuyers as Millennials and other modest income buyers are projected to move into the home buying market in record numbers this year.  Other macro factors such as increased employment, low inflation and low relative home prices are further enticements for new home buyers to act in the first quarter of the New Year.