Housing Market Crisis: Will Fed Intervene with Rate Cut?

well if the Federal Reserve was looking for additional data to show the economy's cooling well they got it today so that's what we're going to talk about briefly this afternoon and also when's the right time to refinance how can you refinance can you refinance when is the best time to refinance so that's what we're going to go over next so without further Ado let's get over to rates rates are down just a hair today they're going to go down even further why right through here so this is the agenda we had for today the economic calendar let me just paint this picture for you I'll just pull out four or five of the highlights right through here so we had uh jobless claims actually they went up so we have more people jobless meaning they lost their jobs continued claims well they are right in line to where we were so not a lot of people are going back and staying steady there corporate profits previously was about 4% it's now negative negative 1.7 GDP went from 3.4 to 1.3 okay this is production R in our economy GDP final readings 3.9 to 1.7 inventories because companies aren't selling as much stuff right now people are finally starting to pull back inventories went from a negative point4 to a positive point2 and then we have pending home sales it is falling completely falling off a cliff 3.4 previously positive negative Point 7.7 right now so these numbers are devastating so what's it doing to the markets well you see see the MBs is right now they're up 32 that means we're going to get a little more reprieve on interest rates over here so they're going to start coming down now now I want to talk to you guys about the question of can you and when you should refinance but if you well let's take a quick GL Glimpse backwards the Dow Jones S&P NASDAQ are all down the good news on a little bit of a brighter side we got oil also down helping on the inflation front so let's get over to the how soon can you refinance a mortgage okay so I basically put this slideshow together it's kind of corny but it was the best thing I can do uh with time constraints right through here so let's break down refinancing your mortgage I'll I'll just caption as that how when why and where and when does it make the most sense so let's go through here refinancing your mortgage can lead to substantial savings over time but it also could cost you more money because if you keep refinancing even though the rates are lower you don't want to keep extending your term to 30 years and then 30 years and 30 years you'll never pay off the house so if if you're going to refinance maybe look into keeping the same time frame on your home that you currently have now that's one just little tidbit however it's very factors including waiting periods and rules may be considered when you're looking into this so let's start going down through financing time frames on a conforming loan that's just a normal loan so if you got you know a conforming loan you you might not know but your lender would know so maybe you call them and say do I have a conforming loan or conventional loan or an FHA or a VA loan so they'll be able to tell you that so with a conforming loan there's no waiting period you can refinance basically right when you walk out the door so I tell this to a lot of people that are using the Builder lenders I'm like I know they rate they're giving you is high but they're still giving you a ton of money for closing costs and things like that so close with them then just call me back and I'll refinance you because there is no waiting period however if you want to pull out cash there is a waiting period and that's for one year okay so now let's go to jumbo loan same thing there is no waiting period cash out if you want to pull out cash so there's two ways to refinance you can call do what we call a rate and term that means you're just paying off the current mortgage that you have so you're just doing you're refinancing to get a rate and maybe a shorter term on that and then there's what's called cash out meaning you're looking to pull out cash for any reason pay off bills put in a pool pay for college tuitions whatever you want to do that's called Cash Out okay FHA and VA usually there's a 210 day waiting period and USDA you have to wait one year okay so that's the breakdown of the time frame on when you can possibly refinance frequency of re refinancing there is no restrictions you can refinance every month if you'd like it's going to be hard to do and plus closing cost but you can refinance as much as you want I actually refinanced probably about four or five times between 20 2018 and 20121 just to capture those low rates as they came due so that's what I did as well um let's go through the next thing rules for different types of mortgages so let's break this down real quick conforming loans there's no legal minimum time frame but some lenders will impose a six Monon time frame jumbo loans no legal required uh requirements but approval criteria might get a little stickier Cash out refinance waiting 6 months to 12 months is normally what's required and it says 20% Equity required well FHA will go up to 85% in cash out VA will actually go up to 100% and do a cash out but this one they're talking about conforming lending okay so now let's go to FHA FHA Loans six months uh six payments made good standings 210 day waiting period so basically that's saying you have to wait till you make six payments and you cannot have missed a mortgage payment and you can refinance VA you have to wait 210 days to do that and USDA you have to wait 12 months but but your payment also has to go down 50 bucks so it's kind of redundant from what we have above now here's where it gets a little bit more interesting I guess when would you refinance okay let's go through this I'm going to say if I agree with these or not most of these I've agreed on so far but increase in home value consider a cash out for for better rates consider cash out I wouldn't do that I wouldn't refinance just because my house value went up to pull out to get cash I I I would kind of debunk that one convert from a fixed to a fixed uh convert to a fixed rate yeah that's most likely I we had a lot of people that were that did fixed rates back when some people might be doing adjustable rates now because rates are so high but if you could actually refinance that rate into a fixed rate a lot of people do do that improve credit score higher scores make qu qualify you for better rates so you have to really focus in on this is it worthwhile to do so how much is your rate going to go down how much are you going to actually save in dollars before you do this so I wouldn't just say because I got a better credit score now I would look to refinance maybe kick the tires or reach out to us we can say okay here's where you're at now and here's where you would be and we can work at the financials for you and see if it makes sense okay shorter loan term now this is where a lot of people kind of I'll say do it the wrong way they'll finance and then they'll refinance they'll keep chasing that rate down which I don't blame them they're saving money most people save two 300 bucks a month but you don't want to keep going back to a 30-year term because you'll just keep paying paying paying Forever on that mortgage it's up to you can you afford that extra payments or not but I would strongly suggest when you refinance keep the same term remaining on your loan as you have now so we can do that uh for your information now here's the FAQs now couple of these I I read previously and I'm like okay I don't agree with that one or I'll clarify it for you so let's get into it impact on your credit it will be a hard inquiry a lot of people freak out because of that did you know when we pull your credit when a mortgage company pulls your credit basically the maximum credit score that you could get hit or how much it could drop is Five Points so five points is going to make or break you know your your ability to get a loan please don't even try um because that's you're you're teetering on the the the the the fence on that one down payment requirement usually 20% Equity is needed not necessar a down payment I don't understand what they put in here because you could refinance you can refinance a VA loan up to 100% actually I think it's 5% you can refinance an FHA loan and go all the way up to 102% and you can refinance a a a conventional loan in most cases up to like 97% so you don't need 20% equity in that so I'm going to have to give that a not really that accurate negative sides of of refinancing higher monthly payments for shorter shorter terms okay well if you shorten the term of your loan most likely unless your rate goes way down you're going to have a little bit higher payment you might not if the rates go down substantially enough you might have the exact same payment on the exact same term you have remaining now so this can be accurate it can not be accurate but if you if you try to pay off a loan quicker most cases your your payment's going to go a little bit higher reduce is equity with cash out well obviously if your house went up in value now you have that much more equity in it and you refinance and pull out the cash well you pulled out that Equity so you're back to square one again so I wouldn't really strip out all the equity in your home unless you really have to because you you'd be put into a really bad position if the market does a downturn or you you lose a job or something like that then you'll be forced to sell that house and you've basically stripped out all the equity and you're going to be stuck okay so that's that and then the last thing is steep closing costs now this is one where like I'm in Illinois for example if you refinance in Illinois your title fees are about 875 bucks and you're going to have an appraisal fee for about 500 bucks and there might be a couple hundred dollar in addition to that so you're probably looking about ,500 bucks okay most people have a mortgage payment at $1,500 or more so basically think of it this way you're going to use one of your monthly payments to pay for your refinance now here's how mortgages work as well just so you understand let's say for example you refinance and you clo you're closing in uh the beginning of May okay so what will happen is we're going to pay off your current mortgage in at the beginning of May so you won't have a mortgage payment your old mortgage company or your new mortgage company in May okay you also won't have one in June because the companies have to wait at least 30 days before your first payment's due and then they push it to the first of the month so if you if you close the beginning of June you won't have a payment in June you won't have a payment in July you'll be due August 1st so that how that works and then the conclusion refinance can be a strategic finan a strategic Financial move it can be if you do it right and you don't overspend and you don't strip out all the equity in your home and you don't keep going back to a 30-year term it makes complete sense to do so and that's about it for that folks so I hope you understand how refinancing works if you think it might be beneficial for you not sure it's a perfect timing but eventually it will how do you reach out to us for some help we go to the raate update.com here's our website you can click apply now right up through there and you're on your way so thanks so much for watching guys God bless have a fantastic day if you got any questions let me know Down Below in the descriptions because I check that you can also reach out to me or my staff right through here our 800 numbers right there and you can reach me via email right through here and yes it is me that's answering so thanks so much for watching guys God bless and if you haven't subscribed yet please do so over there take care have a fantastic day bye-bye

Channel: The Rate Update with Dan Frio

Views: 1,977

Keywords: mortgage rates, mortgage guidelines, real estate market, first time home buyer, mortgage interest rates, Dan Frio, win the house you love, kyle seagraves, Fha, VA mortgage, DSCR, USDA, the rate update, Mortgage Rates 2023, How to buy a home, how much can i afford, how much money do i need to buy a home, housing market trends, Home buying tips, Real estate news, buying vs renting, real estate market analysis, real estate finance, real estate investing strategies, homeownership

Id: FdZaWNROCmU

Length: 10min 57sec (657 seconds)

Published: Thu May 30 2024