Rate Term Refinance Florida
Mortgage Banker - Florida
If you are in need of a rate term refinance mortgage for a property located in Florida you have come to the right place. I have 20 years experience helping happy mortgage clients in Florida refinance their home loans and find the best loan that is right for them.
We are just getting over a 50 year run on some of the lowest mortgage interest rates ever so you would think that mostly everybody would have refinance their loan by now but actually it is somewhat surprising how many customers still need to lower their payment and save money with a rate term refinance.
Here is a graph that shows refinance activity over the last 14 years. You can see lots of activity heading right into 2013. Unfortunately, between March of 2013 and September 2013, almost overnight we had a spike in interest rates of about 1% that slowed us down quite a bit. In the mortgage world that is a nightmare and honestly I was saying to myself that we will not see refinances for years to come. Boy, was I wrong.
A few amazing things have happened since then. I started getting a surge of rate-term refinances for some of the most amazing reasons. Reasons that you don't always think about but I will show on this page. Then, in addition to these unusual circumstances, our economy started showing more weakness than expected which is actually good for mortgage interest rates. The whole shutting down the government controversy further helped rates because it showed more instability in the world financial markets. So after a major increase of 1% over 6 months, interest rates pulled back about 3/8's to 1/2 percent to today's levels which are actually still quite good.
Here are some interesting scenarios that would indicate that you should inquire about a rate term refinance.
1.) You simply need to lower your payment. Lets say your interest rate is 6.5% and the prevailing interest rate is 4.5%. That's a refi! Many customers have heard of the 2% rule. Usually, unless it is a tiny loan, if you bring your payment down 2% it justifies the closing costs of that mortgage. Actually that rule should be called the 1% rule because many customers with larger loans will benefit by just bringing their interest rate down 1%. Let's do the math! You have to take into account how long you intend to be in the home. Take the monthly savings and divide into the closing costs and see what your break-even is.
2.) The No-closing cost loan. Yes I can pay some or even all of your closing costs for you. Customers always ask what are the closing costs. I say they are usually about $4000 and they do not include your escrows of taxes and insurance. If the prevailing rate is 4.5% at 4.75% or 4.875% I will be able to pay closing costs for you. Ask me about this! On larger loans I can pay all of the closing costs making it a free interest rate reduction. Free is one of my favorite words and if I am lowering your rate 1/2 a percent but I get you a free loan, that makes sense!
3.) The cash in refinance. After we had a countrywide wake-up call after the mortgage melt down of 2007-2009 many clients decided to become more prudent and take the old fashion approach of paying down their mortgage as fast as they can. Please see the graph below.
Customers began taking large sums of money and paying down the mortgage and recasting the loan for the years ahead. In many cases they kept the same term so this lowered their payment nicely.
4.) The shortening the term of the mortgage is very similar to #3 except that the customer may or may not pay down the balance but they pledge to shorten the term in an effort to pay off their loan quicker. A shorter term means less accumulated interest over time which means that you will save money over the long term. The hard part about this loan is that you receive the benefit 15 or 20 years from now when you are all done making payments. Your typical rate term refinance gives you the benefit the first month when you make that first low payment. In many cases customers can shorten the term of their loan and keep approximately the same payment because the rate is dropping as well. Also keep in mind a higher percentage of the payment goes to principle with the shorter term. A 30 years fixed will send about 13% to principle, a 20 year fixed about 22% to principle and a 15 year fixed sends about 40% of the payment to principle. So your payment might be higher but it's going in your own pocket.
Here are so other scenarios that you might not expect but you may fall into one of these categories:
5.) The senior citizen loan. Everybody would love to pay their house off by the time their retire but the reality of the situation is ,that happens only about one third of the time. Many customers start that journey and get side tracked by sending their kids to school or perhaps a medical issue or a brief period of unemployment. In this scenario it makes sense for the future retiree to stretch out that term on their loan from perhaps a 15 year to a 30 year to lower the payment for the future years of fixed income. This is especially true if they plan to live in their larger home for say 5 years and then move to something more manageable. Reverse mortgages are another possibility for seniors who want an improved cash flow and have lots of equity in their home.
6.) The see the writing on the wall loan for adjustable mortgage holders. Many customers who took out adjustable rate mortgages many years ago were not only smart but somewhat lucky. These customers locked in savings with their low adjustable rates in the first 3 or 5 or 7 years of their loan and then they had the pleasant surprise that out government stepped in and artificially lowered the indexes that help determine their payment. See graph below.
Most adjustable rate mortgages are tied to the one year T-Bill index or the one year LIBOR index. In order to determine the new rate after the fixed rate period you add the index to a margin which is spelled out in your adjustable rate note and rider. The margin is typically anywhere from 2.25% to 3.00%. Many adjustable rate customers were happy to see our governments actions of squashing these indexes from 5% to less than a half a percent. This was done to stimulate the economy and slow down a waive of foreclosures that was happening at the time.
The writing is on the wall for these customers because our Federal Reserve has stated that they intend to slow down the practice of purchasing American mortgage backed securities which means these indexes and rates will rise eventually. Our present day low rates cannot last forever so it might be wise to grab them now.
7.) The I want to get rid of my second mortgage loan mortgage. In much the same way adjustable rates will rise someday so will the interest rate on second mortgages. Currently we have the prime rate at virtually nothing so many customers have equity lines at 3.00% interest only which is great. It is inevitable that the prime rate will climb over time and customers with this second mortgage with be dealing with a lot of exposure to interest rate changes. Also, recently I had a few customers who chose to payoff the second so that they could refinance their first at a lower rate.
8.) Harp loans may possibly go away this year. The home affordable refinance program has helped a lot of customers do a rate term refinance on their home even though they are completely upside down on value vs what they owe. I have several pages devoted to these types of loans I will refer you to them here. There was hope for a HARP 3.0 but many believe that will not happen because property values have started to rise again in Florida and across the country so those customers will just fall into another category of rate term customers.