Mortgage Rates Way Below Forecasts
Current mortgage rates are low.
According to Freddie Mac’s weekly survey of mortgage lenders nationwide, conventional 30-year fixed-rate mortgage rates averaged 3.46 percent last week for buyers willing to pay an accompany 0.5 discount points at closing.
These rates are markedly lower than what analysts, economists, and consumers predicted for this year’s interest rates.
Low mortgage rates have sparked a mini-refinance boom, with refinance activity at its highest in two years.
Specifically, refinance loans have increased in the streamlined refinance category, which includes loans completed vis the FHA Streamline Refinance program and the VA IRRRL.
The refinance surge may be a victim of its own success, however.
As lender business swells from new customers nationwide, banks lose the ability to close loans quickly, which causes mortgage rates to rise.
The longer it takes to a close a loan, in general, the higher the accompanying mortgage rate.
According to Ellie Mae, a mortgage software company whose software manages more than 3.7 million mortgage transactions annually, the average time to close on a mortgage has climbed from earlier in the year, reaching 46 days nationwide.
These additional few days of processing have a real effect on mortgage rates. Mortgage rates are now higher by as much as 12.5 basis points (0.125%).
If you plan to refinance your home in the near future, consider getting your loan in-process soon. With mortgage rates defying expectation, a rush to apply is underway.
The more people that apply, the higher your potential rate.Verify your new rate (Dec 12th, 2018)
Refinances Are Known By Different Names
With mortgage rates still low, and with home values up more than 35% since 2012, there are literally millions of U.S. homeowners potentially-eligible to refinance — potentially 8.7 of them, to be exact.
And, while some homeowners will prefer a cash-out refinance on their home mortgage, the most common refinance type is the “rate-and-term” refinance.
A rate-and-term refinance is defining as a refinance where you lower your mortgage rate, reduce your loan term by some number of years, or refinance to remove your loan's mortgage insurance.
Rate-and-term refinances are available for loans of all types. They often go by different names.
The rate-and-term refinance of a conventional loan — that is, a loan which is backed by Fannie Mae or Freddie Mac — is known as, simply, a refinance. There is no special title assigned.
Rate-and-term refinance loans for other loan types, however, are typically performed as exclusive programs for holders of those given loan types.
The VA Streamline Refinance
The majority of rate-and-term refinances conducted for military borrowers with an existing VA home loan are performed under the Interest Rate Reduction Refinance Loan (IRRRL) program.
Pronounced “earl” and often called the VA Streamline Refinance, the IRRRL program is streamlined refinanced program which waives most paperwork, credit, and documentation requirements.
The FHA Streamline Refinance
There’s an exclusive refinance program for FHA-backed homeowners, too.
The FHA program, known as the FHA Streamline Refinance, also waives income, credit, and asset paperwork for the borrower; and does not require a home appraisal.
Homeowners using the FHA Streamline Refinance are required to save five percent on their mortgage payment in order to be program-eligible.
The USDA Streamline Refinance
For homeowners with an existing USDA mortgage, there’s the USDA Streamline Refinance.
Similar to the IRRRL and the FHA Streamline Refinance, the USDA refinance loan requires little in the way of documentation and verification; and offers below-average rates for eligible homeowners.
USDA loans are only available as fixed-rate loans.
The HARP Refinance
And then, there’s HARP.
A refinance loan made specifically for homeowners with conventional loans whose homes have lost value since the date of purchase, HARP refinance loans will sometimes waive paperwork, but can only be used by homeowners whose loan-to-value is above 80%.
The HARP program expires at the end of 2016.
What Are Today’s Mortgage Rates?
Mortgage rates are low and the housing market is strong. No matter when you purchased your home, you may be eligible to refinance to today’s low rates.
Take a look at today’s real mortgage rates now. Your social security number is not required to get started, and all quotes come with instant access to your live credit scores.Verify your new rate (Dec 12th, 2018)