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Refinancing Your Mortgage:
Is Now the Right Time?

May 18, 2020

By David Staggert
Manager, Mortgage Originations, ESL Federal Credit Union

Over the past several months and weeks, the volatility in the market as a result of the novel coronavirus (COVID-19) pandemic has led to unprecedented fluctuations in mortgage rates—anywhere from .25% to .375% hour over hour, which has been virtually unheard of for a long time.

Given the fluidity of the current situation, including rates reaching near historic lows, you may be wondering if the time is right to pull the trigger on refinancing your mortgage. However, there are a few key considerations and steps to keep in mind as you navigate through the process to determine if the timing is right for you.

Establish Your Goals

The most common question you might be asking yourself is: Is it worth it to refinance? In general terms, when interest rates are half a percentage lower than your current rate, it may be worth your while to inquire. However, just because rates are low may not necessarily mean it’s the best option for your situation.

First, ask yourself what you’re trying to accomplish and consider your short- and long-term plans. For example, are you looking to lower your monthly payment, reduce the interest you pay over the life of the mortgage, or shorten your payment term? Also, examine your current situation and ask yourself if you’re planning to move in the next three to five years, as there may still be a pathway to reduce the terms of your mortgage and refinance at the same time.

It’s important to establish these goals up front and speak with your mortgage lender to determine the best course of action. They can walk you through the process and payment terms and evaluate what options are most favorable depending on your circumstance.

Verify Your Assets Up Front

The volume of mortgage refinance applications has been higher than normal for most lenders over the past couple months. To ensure the quickest and most efficient process, there are a few preparatory actions you can take before applying.

Gather all of your income and asset documentation on hand before communicating with a lender, as this will help determine your ability to repay the mortgage. Providing the most accurate information up front prior to formal verification will ensure there are no surprises later on in the process.

If you’re currently in the refinancing process and find yourself unemployed or furloughed due to the pandemic, be sure to speak with your mortgage lender before withdrawing from the process altogether. While income verification will be required 60 days prior to closing, there may be options to extend your current application or identify alternative income or assets that can be used to qualify.

Socially Distance Your Home Appraisal and Closing

In this new normal of social distancing, and in accordance with health guidelines, several adjustments have been made in the mortgage process concerning appraisals and closing procedures. If you’re planning to have an appraiser come into your home, there are a few safety steps that can be taken to reassure all parties.

To reduce the number of physical touchpoints throughout the home for an appraiser, consider opening doors, turning on light fixtures, and running faucets on low before they arrive to avoid contact. In certain mortgage programs, there are relaxed guidelines to allow for an exterior appraisal only. When you reach the closing stage of the mortgage process, there are virtual options available now, as well, such as remote or virtual closings via video conferencing and even drive-through closings to ensure the safety and well-being of everyone involved.

Whether you’re simply thinking about it, or are several years into a 30-year mortgage, the most helpful course of action is to connect with a mortgage lender to evaluate your options and determine if refinancing is the right choice for you.

If you are looking for more information on how to refinance your mortgage, call our mortgage originations team at 585.336.1502 or apply online.