Refinancing During Corona Virus Uncertainty - The dilemma at hand.
As of late, a similar question keeps coming up. Refinance? Should I or shouldn't I? Please help. Another similar topic that admittedly causes confusion and some misconception is the fed funds rate and how it affects a mortgage rate. Specifically, a question written by a concerned client wrote:
With all that's going on in the world, I heard that the mortgage rates are close to 0%. Is it possible for us to refinance?"
To answer, I thought I would try and help along some of those confusing points and do a talk through on this hot topic.
The close to 0% rate referred to above is the fed funds rate. The federal reserve board reduced the fed funds rate to a range of 0% to .25%. Mortgage rates actually do not track or follow the fed funds rate. The fed funds rate sets the rate at which banks borrow funds and it also sets short term rates such as prime, credit card rates, auto loans, signature loans, and home equity loans (all short term). The fed does not directly impact mortgage rates.
What does affect mortgage rates is the trading done on wall street where investors are buying and selling mortgage-backed securities. We also watch the 10 YR Treasury bill as an indicator, but not a dictator.
The bond market, that I care about and that which affects most borrowers like yourself, has been reacting negatively since opening bell Tuesday, March 10th
. We are all shaking our heads watching the bond market hourly. It’s an incredibly volatile time right now in the financial markets. Just to put things into perspective, during yesterday’s trading day, mortgage-backed securities lost 300 basis points in one day. This is huge activity that is highly abnormal. That sell-off is what has added to the negative impact rates are suffering at the present time. Because there has been an immense sell-off, the fed is stepping in to try and help by buying mortgage-backed securities.
What others are doing about the dilemma
Other loan officers whose business relies solely on the fast sell will tell you it's the best time to refinance right now!!! I am here to be open and honest because I want to earn your business for the long term. There are successes in the mortgage world that happen every day with careful thought and attention to detail along with 14 years of experience.
What I am doing about refinance
A repeat client recently came back asking about refinancing. He came to me on February 24th and said, "Let's do this." We had some work to do as the credit wasn't quite up to par, but it was workable. I figured I'd work a little on his credit scores behind the scenes while we have his file prepped into processing. To start with we could get him into a 4.25% 30 yr fixed with the credit score he had. At the time, it was an extreme help to him because we were consolidating some medical debt that was starting to become overwhelming.
By the time he was ready for underwriting, his rapid rescore came back and I got him down to the 3.25% he and I originally were shooting for. On top of that, the bond market was improving daily. So with those improvements, his new rate with the new credit score we achieved, had him down to 2.875%. I surprised him and I loved his response to me. He said, "Thanks for having my back, Casey."
I am here, to be honest, and tell you that rates will be elevated right now compared to a couple of weeks ago. And there is honestly no telling how long until they bounce back to recommend a refinance. However, if things do resume to what we had, there will be huge opportunities for refinances. Especially if someone is also looking to consolidate debt. And I will have your back.
Become part of my increasing priority list
Please let me know your thoughts, concerns, or questions. I am here to help!
If you like, I can add you and your family to my priority list of people to watch the market for when a correction occurs. Would you like me to do that?
If so, please email me, Casey Moseman, at firstname.lastname@example.org
Casey Moseman, CMPS,
All Western Mortgage
| Branch NMLS # 14210 | 8345 W Sunset Rd #380 | Las Vegas NV 89113
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