Page 14 - September 2021 Issue.indd

DOLLARS AND SENSE by Tolbert Rowe

The Benefits of Refinancing Your Mortgage

The recent announcement that Fannie short lived and by June 2020 the real Interest rates are hovering in the 2%
Mae and Freddie Mac were eliminating estate market took off. Low interest rates to 3% range with the lowest rates for

the .50% Adverse Marketing fee has and limited inventory of homes for sale those with higher credit scores, 760 or
leveled the playing field once again made for a seller’s market that we have higher and shorter than 30-year term.
by putting refinance rates in line not seen in decades. Demand for homes Real estate values are the highest they
with purchase rates. Depending on was and is at an all-time high as those have been in over a decade and appear
your current situation you could save whose income was not impacted by the to have a little more room to go up.

hundreds or even thousands of dollars pandemic scrambled to find more open Homeowners interested in refi nancing

in interest costs. spaces and larger more accommodating are the beneficiaries of a perfect storm
homes for their changing work from of low rates and high values.
The Adverse Marketing fee was
home lifestyle.
implemented on December 1, 2020, Unless you have refinanced in the last

and was charged on all conventional First time buyers, stung by the rapid 12 months you need to take the time to
refinance mortgages. Th e eff ect of this rise in monthly rents, have scrambled to look at your overall fi nancial situation,

fee either increased closing costs by 50 buy a home where their new mortgage starting with your current mortgage
basis points (a basis point is 1/100th of payment would be comparable to what balance, or balances if you have a
a percent so 50 basis points is 1/2 %), or they are paying in rent. And in some home equity loan. Consolidating a fi rst
it increased the interest rate by 1/8%. A cases, their mortgage payment was less mortgage with a home equity should be
$200,000 loan would cost $1,000 more than what they were paying in rent. on everyone’s radar screen if the home
in closing costs or the monthly payment Hence the GSAs have not suff ered huge equity has a signifi cant balance. When
would increase by $13 per month. interest rates begin to go up, the prime
losses because of forbearance. 75% of

In announcing the implementation of those who entered into forbearance rate will be first, and long-term rates will
go up also. Consolidate and refi nance
this fee on all conventional loans the agreements have exited those them both for the shortest term you can
Federal Housing Finance Agency stated agreements successfully so it can be reasonably aff ord.
it was needed to help the Government argued that Fannie and Freddie did not
Sponsored Enterprises (GSA’s) also suff er any signifi cant financial loss due If your mortgage balance is less than

known as Fannie Mae and Freddie Mac to forbearance agreements. $60,000 and your current rate is less than
recoup losses from forbearance defaults 4% you could not justify the expense of

and to help manage the higher risk of The effect of eliminating the adverse refinancing of $3,000- $5,000 depending

lending at that time. marketing fee means that interest on several variables. The biggest variable
rates for owner occupied refinance affecting costs and interest rate is
Many felt this was just a money grab on transactions are the same as purchase how much additional money you are
the part of the GSE’s because the initial transactions. No more interest rate borrowing.
shutdown of the real estate market due bump because you are refinancing a
to the pandemic in March of 2020 was mortgage instead of purchasing. If only borrowing enough to pay off your
existing mortgage plus closing costs it
is considered a rate and term refi nance.
If you are borrowing additional funds,
“Your Mortgage Consultant Since 1985”
more than rate and term, this is called a
Purchase or Refinance cash out refinance and the closing costs

and interest rate will be higher than a
rate and term refi nance.
Another consideration is how much
longer you have until your current
115 E Dover St. Ste 3 - Easton, MD mortgage is paid off. I recently had a
homeowner call me about refi nancing
tolbert@baycapitalmortgage.com C. Tolbert Rowe, whose interest rate was 6.25%. Th ey had
www.baycapitalmortgage.com NMLS Vice President/Lending

182844 eight years left on a 30-year mortgage
and their current principal and interest
410-819-3005 / cell 410-310-3520 payment was $477. They needed to
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