Just a few months ago, refinance loans made up more than half of all loans closed, according to Ellie Mae's October Origination Insight Report. The monthly report noted that, previously, the highest percentage took place in March 2015.
One of the contributing factors for this record high is the current condition of the market, which is highly favorable for buyers. Interest rates have been on a downward trend and continued to decrease last month. Low rates have motivated many buyers to reach out to their lenders to find out if they are eligible for a refinance; this has led to a high volume of loan originations.
If you're a homeowner considering a refinance loan, you'll first want to determine if it's the right time for you to refinance your loan during a discussion with your lender.
Your lender will review your current loan terms and financial situation to determine if refinancing may be able to help you pay off your mortgage faster, save you money and build on the equity you currently have in your home. If your financial situation has improved since you first purchased your home, you may be eligible for a lower monthly payment. Additionally, if you have reached at least 20 percent equity in your home, refinancing could help remove your private mortgage insurance (PMI). If it's determined that refinancing could potentially benefit you in these ways and you decide to apply, you'll go through an approval process similar to when you first applied for your home loan.
During the approval process, several different factors like your debt-to-income (DTI) ratio, different types of credit you hold, your current monthly income and payment history will be considered to determine your eligibility. While it can be a great decision for many, there are times when it doesn't make financial sense to do so. It is best to consult a trusted lender to discuss your specific situation.
At Premier Mortgage Resources (PMR), we offer many loan programs to fit unique financial situations. Our loan officers are ready to talk to you about current rates and market conditions to decide if refinancing makes sense. We'd love to be considered your partner in reaching your financial goals through homeownership or refinancing.
If you think you're ready to take the next step on your financial path, we'll put you in a touch with a local lender. Contact our team today to get started.