September 15, 2021
Another Chance to Refinance
By Clete Albitz, CFP®
Mortgage refinance rates are back to historically low levels following the removal of the Adverse Market Refinance Fee on August 1st, 2021. This was 50-basis point fee (0.50%) lenders were required to pay the Federal Housing Finance Agency (FHFA) which regulates Fannie Mae, Freddie Mac and the Federal Home Loan Banks for refinanced mortgages. If you have a mortgage, you should review your current terms and determine if refinancing would be beneficial.
You’ll typically get the best rates if you have good credit and your mortgage is considered a conforming loan, one with terms and conditions that meet the funding criteria of Fannie Mae and Freddie Mac. Conforming loans limits are currently $548,250 in most parts of the U.S. but can be as high as $822,375 in high-cost counties. Lenders prefer to issue conforming loans because they can be packaged and sold in the secondary mortgage market.
Depending upon your objectives, a lower mortgage rate can help free up additional monthly cash flow or reduce the number of mortgage payments until your home is paid off. Despite improvements in technology, refinancing still requires a time commitment to gather your financial documentation and sign documents. However, if you can reduce your mortgage interest rate by 0.50% to 1.00% without extending the time until your mortgage is paid off, you’ll likely find it will be worth going through the refinance process.
For a comprehensive review of your personal situation, always consult with your legal or tax advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.