Interest rates have never been lower and a refinance boom is underway. Homeowners are saving hundreds of dollars each month on mortgage payments and refinancing out of adjustable rate mortgages. Before you move forward, do your homework.
Frank Sheehy with Flagstone Lending recently completed an FHA loan for a homeowner that not only reduced the interest rate but saved them $5,000 over a similar conventional loan at closing. After analyzing the various loans available, Frank recommended the FHA loan. “A lot of lenders don’t like to do FHA loans,” said Frank Sheehy on the Homework Houston radio show. “There’s more paperwork, more hassle and more interface with government agencies.” Frank recommends asking about FHA loans even though other lenders, Realtors or title companies may discourage you. In many cases, the down payment will be lower and the loan qualifications will be easier to meet.
Conventional loans are also good values now with interest rates creeping under 5%. Qualifications for refinancing are tougher but the savings can be substantial for those willing to do the paperwork. “For those that can provide the information we need and can do the heavy lifting, they can plub into some unb3elievable deals right now,” said Sheehy. “If you haven’t had a late payment in the last 6 or 12 months, you can get financed.”
Frank Sheehy recommends investigating refinancing if you’re paying an interest rate of 6% or more, if you have equity in your house that can help you pay down other debt, or if you’re thinking about moving anytime soon. “If you’re in a position to move up, now is the time to do it,” said Sheehy.
Responding to questions about interest rates, Sheehy said the rule of thumb is 2%. If you can drop your interest rate 2 points or more and stay in your home for a few years, refinancing will pay for itself and save you money in the long run.
Where are interest rates headed? “Interest rates are uncertain,” said Sheehy. In these crazy times, we never know what tomorrow is going to bring. If your have a rate that is acceptable, go ahead and lock it in.”
Frank Sheehy always recommends 15 or 20 year loans to his clients to save literally thousands of dollars in interest payments. “You’ll pay your house off much more quickly and save thousands of dollars in interest. It hurts a little up front but many of my clients over the years have called to thank me for suggesting it.”
Jeff, a Homework Houston radio show caller looking for advice, told Frank Sheehy that he had submitted a refinance application with a major lender. That lender told him his house was worth much less than he paid for it and that he’d have to pay an application fee to move forward. Sheehy said that the big lenders are inundated with applications and charge an application fee to reduce the number of applications. Big lenders typically do an initial online appraisal that may or may not be accurate. “If it’s not an easy loan, they send you packing,” said Sheehy.
“We never charge an application fee and will consult with you personally at no charge,” said Sheehy who works with many clients who are not sure which way to proceed or need extra help with their loans. Companies like Flagstone Lending tend to offer more personal service and are willing to take extra time to make sure that the loan is the best available for their clients.
After asking a few questions about Jeff’s loan and making some quick calculations, there was about $500 in possible monthly savings. Frank Sheehy offered to look more closely at the loan, order an appraisal by a local professional and nail down the exact costs without charging an application fee.
Call Frank Sheehy at 713-802-7030 extension 323.