Mason & Associates, LLC

Mortgage Rates Drop – Near historic Lows

John Mason, CFP®

Mason & Associates frequently monitors conventional and VA mortgage rates.  The constant monitoring of mortgage rates enables us to provide the best possible advice to those who are purchasing a home as well as those who need to embark on large home improvement projects or incur a large expense such as college tuition. Through our comprehensive financial planning process, we are able to help identify the clients who may need to execute a refinance to lower the interest rate or refinance with cash out to consolidate debt or pay for a large expense.  Take advantage of our team’s experience helping clients through hundreds of refinances as well as our experience helping clients transition from their current home to their retirement home. Transitioning to your retirement home can be a stressful experience, but our team can guide you through the process and provide advice to make the transition as seamless as possible.

Before You Stop Reading!

The global landscape for mortgage rates has changed drastically over the last decade.  Previously, it only made sense to refinance if you could drop 2% points on a 30 year loan (10% to 8%).  Once rates hit 5% it made sense to refinance if rates dropped by 1%.  With rates hovering in the low 4’s for quite some time, we believe it can make sense to refinance to achieve as little as a 0.25% rate reduction. The days are gone where it only made sense to refinance if rates dropped by X percent.  In addition to the rate savings, the previous benefit of the refinance was dependent on how long you would remain in the home after executing the refinance.  For example, a refinance did not make sense for a person who would reside in the home for 1-3 years because they would not be able to recoup the cost associated with the refinance.

Everything will change. Everything has changed.

There is no longer a fixed percentage decrease required for a refinance to make sense.

There is no longer a fixed period that you must remain in your home for a refinance to make sense.

CapCenter

Our research discovered that CapCenter does not charge any fees to execute a refinance or charge any fees to generate a mortgage of $100,000 or more on a home purchase.  Zero fees is not a typo.  Please keep in mind that there could be a cash out fee or a VA Funding Fee for active duty or veterans without a VA disability rating. In addition, consumers are required to pre-fund escrow accounts but will be promptly refunded any escrow balance for a loan that is closed or paid off.  Their offer does have limitations, and there are additional costs that apply to some transactions. Learn more by going to their website and carefully reading through their disclosures.

We recommend CapCenter for the following loan types:

  1. Conventional Loan - Refinance
  2. Conventional Loan- Home Purchase
  3. Conventional Loan- Cash out Refinance
  4. VA Loan- Refinance
  5. VA Loan- Home Purchase
  6. VA Loan- Cash out Refinance

Conventional rates as of 2/3/2020

30 Year- 3.625%

20 Year- 3.375%

15 year- 3.25%

10 Year- 3.25%

VA Rates as of 2/3/2020

30 Year- 3.125%

15 year- 3.250%

Consider a refinance if your mortgage rate exceeds 3.75% on a 30 year or 3.5% on a 15 year on a conventional loan. 

Consider a refinance if your VA loan interest rate exceeds 3.25% on a 15 or 30 year loan.  It is our understanding that the VA may require a 0.50% rate reduction. Please check with CapCenter or other mortgage company.

If you’re thinking about moving, please let your advisory team know so that we can update your financial plan and help you plan for this transition. Do you need foundation repair or other substantial update to your home? Let us know so we can help you determine the best way to pay for this expense either through a refinance or from your existing assets.  Please contact us if you would like to discuss the possibility of a home purchase or refinance. 

Please note that this information was provided for general informational purposes and is provided in good faith to give a general understanding of current mortgages as they relate to a holistic financial plan.  Mason & Associates, LLC is not affiliated with any Mortgage Company and does not receive advertising fees or any other compensation.