Falling Stock Market Leads to Favorable Mortgage Rates

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Fears of a global pandemic, falling stock market and travel alerts have all been linked to the coronavirus, but a rush to refinance homes?

As concerns about the virus spread to stock markets and they become more volatile, many people are moving their money into investments that appear to be more stable, like mortgage bonds. And this influx of investment cash is driving down interest rates. This means that if you’re paying a mortgage right now, you might want to see if you could pay a lot less.

“I knew that coming in on Monday we were going to see interest rates come down further this week,” said Nick Parent of the Vermont Mortgage Company. And he knew that meant he would be busy, with dozens of clients calling him to refinance their home. “I don’t think we’ve seen rates this low since October 2013.”

Parent says people who bought homes and got mortgages in recent years when interest rates were higher are now moving to lower rates, paying tens of thousands of dollars less over the years. of their mortgage. “Depending on the loan amount, it could save someone $ 100 to $ 300. The one I closed today was actually $ 400 a month that they were saving because of the amount of their loan, so it’s real money, ”he said. .

Real money that means real change for families like Ernie Rossi’s who decided to refinance. “It makes a big difference,” Rossi said.

They went from a 30-year mortgage with an interest rate in all four to a 20-year mortgage in all three. That translates to $ 300 a month in savings that he and his wife can spend on looking after their 1.5-year-old child or renovating their home on Lake Iroquois in Williston.

“We all love to save money so we were super excited,” Rossi said.

But what makes sense to his family may not mean to some. Parent says that if homeowners are planning on moving soon, they’ll probably want to stick with what they have and not spend up to $ 3,000 on refinancing. “The breakeven point on a refinance is usually around a year or two, and if you don’t think you’re going to have the house then why spend the money on refinancing? Because it costs money. “, did he declare.

Lower mortgage interest rates are also good for home buyers. “Enjoy it now if you are able to do it,” Rossi said.

The local real estate agent says what he sees in his job because of the lower interest rates is that people can afford more expensive homes than they otherwise would. “Now you are looking at rates going down. You are now getting more purchasing power on the buy side – a quarter point could be 20,000 to 30,000 purchasing power, so that adds up,” Rossi said. .

The interest rate you will get depends on your financial situation and your credit rating. But in general, if you’re currently paying in a range of four percent or more, Parent says you might want to call your mortgage company to see if you can get anything in all three. Or if you want a shorter mortgage, he says maybe now is a good time to do it. In one scenario we ran it for us, we saw someone save around $ 40,000 going from 30 years to 15 years and they didn’t have to pay much more each month.

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