Time May Be Running Out To Refinance

Have you considered the VA IRRRL but haven’t refinanced yet?  Well your time may be running out.  Fed Chairman Ben Bernanke discussed how the central bank might wind down is financial easing policy and that set off a spark of activity in the markets.  He stated that the Fed could scale back the pace of its bond purchases at one of the “next few meetings” if the economic recovery looked set to maintain a forward momentum.  As a result of his statements, interest rates rose and the mortgage industry braced for the worse as overall application activity was down 8.8 percent and refinance applications were down 12.3.

Consider the following benefits of the VA IRRRL and ask yourself, “Why haven’t I taken advantage of this yet?”

The VA Streamline refinance home loan is without a doubt the best mortgage refinance loan on the market. No other refinance loan program is as simple and easy to qualify for and there are so many unique benefits that come along with it. Although, In order to do a VA Streamline refinance, your current loan must be a VA home loan.

One of the biggest benefits of the VA Streamline refinance is that you do not have to go through credit qualification.  There is absolutely no need for lenders to pull your credit history and look at your scores. However, your existing mortgage must be current and you cannot have had any more than one thirty- day late mortgage payment within the last 12 months. In order to do a VA Streamline refinance, your current loan must be a VA home loan.

Another benefit is that the regular underwriting process does not apply. Your lender is not going to check to see how much money you make. So you do not need to send in bank statements, W2’s, paychecks, etc. Since you have been making your mortgage payments, they know that you have the means to keep it up. Along with this, lenders are not going to be calling your employer to make sure that you are still working with them before considering giving you a loan. With a VA Streamline refinance a income verification is no issue to you at all, since they will not be doing that.

VA Streamline refinances in most cases can allow you to arrange your refinance to be completed with absolutely no out of pocket expenses. All of the closing costs and pre-paid can be rolled into the new loan amount and on top of that there is no appraisal required. As you can see there are so many unique benefits of a VA Streamline refinance as listed above, if it sounds like this is for you, take advantage of this amazing opportunity.

But is the refi boom really over?  Well according the Mortgage Bankers Association, it’s starting to wind down as they are reporting a decline in mortgage applications.

“”We have been expecting that refinancing volume would drop pretty sharply in the second half of 2013,” said Mike Fratantoni, the MBA’s vice president of research and economics.  “This refinancing boom has been going since late 2008, early 2009. The best credit borrowers have been able to refinance a couple of times. As rates tick above those levels, that group of borrowers is no longer going to have an incentive to refinance.”

Fratantoni expects refinancing of mortgage applications to drop significantly from current levels “to below 50 percent before the second half of the year,” he said. “Right now our forecast is a 74 percent refinancing share in the first quarter, 67 percent in the second, 46 in the third, and 42 in the fourth.”

In 2014, refinancing applications will account for about 36 percent of all mortgage applications— which is less than half of their current stake.

So is it time to panic and rush into anything?  Maybe, maybe not.  Not everyone is pessimistic on what the market is going to do.

Bob Walters, the chief economist at Quicken Loans says the following. “I think the Fed will hold strong to make sure the economy is on solid footing.  I think we’re good through 2013, going beyond that, it starts to get a little fuzzy.  The market’s starting to price some of that uncertainty in.”

By the end of this year we could see rates higher but not by a lot.  Rates could hover anywhere between 4.25 and 4.75 percent on a 30 year fixed mortgage which is up from the current par pricing of 3.75 percent.  We could see refi’s drop to half or slightly more than that of all mortgage applications by the end of the year.

Even though refinance application are down nationally, we are beginning to see that loan customers are considering different loan products, namely adjustable rate mortgages because they offer such low rates for periods of up to 7 years on a VA Hybrid.

Consider the following: Most 30 year mortgages are only on the lenders books for a period of 5 to 7 years before the consumer refinances again.  With VA Hybrid rates at or below 3.5% they are a great option for anyone looking to lock in savings.

In closing:

The current market condition is a “good-news, bad-news” situation.  The economy seems to be finally see an improvement and getting its legs back.  As a natural course, interest rates are going to be going back up.  For any homeowners that are still waiting for interest rates to fall even further, that time may have passed. If you continue to wait until the end of the year to refinance you may end up with a rate that is much higher than it is today.  Whether you decide to take advantage of the current 30 year rates, reduce the term of your loan or go with an adjustable rate mortgage, it may be time to pull the trigger on refinancing if you haven’t done so already.

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*Annual savings calculator based on 2015 monthly average savings extrapolated year-to-date.