Ultra-low mortgage rates make it a jolly season for refinancing

The extremely low mortgage rates make this a fun season to refinance
U.S. homeowners are putting super-cheap mortgage rates in their stockings ahead of the holidays and refinancing home loans more than twice as fast as a year ago, a new report shows.
But despite the ongoing refi frenzy, experts say millions of homeowners are still settling for lumps of coal. They are clinging to their higher-interest loans and ignoring ways to lower their monthly mortgage payments by refinancing at today's amazingly low interest rates.
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Demand for new mortgages to buy homes is also growing much faster than it was a year ago as the rock bottom interest rates help offset soaring house prices.
Refinancing is driving up mortgage applications overall
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Mortgage applications rose 0.8% for the week ending December 18, the Mortgage Bankers Association (MBA) reported Wednesday.
Refi inquiries increased by 4% compared to the previous week and increased by a remarkable 124% compared to the previous week. Refinancing loans now account for 74.8% of all mortgage applications, up from 72.7% last week.
30-year fixed-rate mortgage rates stayed near record lows in the MBA survey last week, rising from 2.85% last week to 2.86% - but that's still a full percentage point lower than at this time last year.
"Mortgage rates have changed little this week as the markets digested approval of a second coronavirus vaccine and a $ 900 billion stimulus package," said Danielle Hale, chief economist at Realtor.com. Moderna's vaccine was finally approved by the Food and Drug Administration and Congress approved a new COVID relief bill.
Not yet refinanced? There is still time
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Refinancing now could save more than 19 million mortgage holders an average of $ 308 per month, according to mortgage technology and data provider Black Night.
Assuming you have solid credit and at least 20% home equity, you can get these extremely low rates while they are still available.
Although rates have steadily declined since the coronavirus lockdown began in March, waiting for even lower rates could backfire.
It was only last month that rates rose as drug manufacturers exchanged encouraging news about COVID vaccines before slipping to new lows.
Instead of trying to time the market, try to keep prices low while you can. The closing process can take some time - it took an average of 59 days to close a refinance loan in November, two days more than the previous month, says mortgage technology company Ellie Mae. Locking the rate specified by your lender will usually guarantee the interest on your loan for 30 or 60 days.
If you miss out on the lowest prices, you may have to look for other ways to save on housing costs. When it's time to buy or renew homeowners insurance, seek quotes from multiple insurers to get the lowest price on the coverage you need.
Buyers with good offers give away low prices
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New mortgage applications - called “purchase loans” - fell 5% last week, but the MBA said they were still 26% higher than the same week a year ago.
"There are still signs of relative strength in the real estate market through the end of 2020," says Joel Kan, the MBA forecaster. "But housing affordability will be worth monitoring for the next year."
According to weekly market data from Realtor.com, demand for homes remains strong and hunger for homes is driving list prices high. But even with a 12.7% jump in price over the previous year, low mortgage rates lead to savings for buyers.
"Average home buyers are still saving $ 3 to 4 a month on their principal and interest payments," says Hale of Realtor.com. "In other words, if today's home buyers were facing the median mortgage rate last year, they would be paying an additional $ 148 per month."
Whether you're looking to buy a home or refinance an existing mortgage, shop around for the lowest possible interest rates. Comparing at least five interest rates can save you thousands of dollars over the life of your loan, according to studies.

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