The homeowner who wants to refinance today has more options than ever before. There are banks and lending companies competing for their business. The consumer has a chance to pick from a variety of refinancing rates. An interesting factor in today’s low rates is that they are due to Covid-19.
The reason for this is due to the financial impact Covid has had on the American economy as well as the job market. The more unemployment and lower economic growth, the better the refinancing rates. Because it will likely be at least another year before the American economy is back on track, refinancing in 2021 is ideal.
It is important to remember that if you have lost your job or have taken a large salary reduction, refinancing might not be available. In order for a homeowner to qualify during this time, they must have a reliable income and a fairly good credit score. With this knowledge, the homeowner can rest assured that if they meet this criterion, they may certainly reap the benefits of refinancing.
For example, if a homeowner has a high monthly payment, and their income has decreased, due to Covid, yet they have a decent credit score, they may indeed qualify, especially if they are able to utilize the stimulus checks to show they have available funds. If they find they’re able to refi, they can look forward to possibly lowering their monthly payments and getting a lower interest rate.
In addition, if you decide to remain in your home for longer than originally anticipated, due to the pandemic, refinancing may help you pay off the loan quicker. Nonetheless, the current refi rates will not be this low forever, so if a homeowner is interested in refinancing, it is suggested they begin the process soon before the rates go up again.
Though interest rates are the lowest they’ve been in decades if the homeowner is unsure of their current work situation, or if they’ve been having difficulty keeping their credit score above 650, they might have a difficult time qualifying. Because the rates are so low, the lenders have become quite strict in their practices, particularly with regard to the above-mentioned issues. The pandemic has put stress on the American workforce, and today’s lenders will help you refi, but you must be able to show that you’re able to pay back the loan.
Something else to consider, is when you apply for a refi, the lender will look at your credit score, also known as a “hard pull.” If your credit is not the greatest, and you attempt to refi and you don’t qualify, you’ve just decreased your credit score by simply applying. This is something lenders often don’t mention unless the homeowner inquires. In addition, if the homeowner with the less than perfect credit score continues to apply with other institutions, the credit score will continue to plummet, and soon you will have difficulty qualifying for any major purchase. Therefore, it is vital that the homeowner make a checklist of everything needed before attempting to refi.
Before jumping the gun and trying refi, and possibly injuring your credit score, it would be wise to look at some important factors. These include where to find the best interest rates; a bank or a private lender, such as Quicken Loans. In addition, the homeowner needs to decide whether they plan on moving anytime soon or want to remain in their primary property. There is no need to refi if you do not intend to stay at your current location, so it would be wise to take a look at what your future holds, and whether you’ll be moving in the next few years.
The pandemic has brought insurmountable pain and suffering to this country, but it has also opened the pathway for homeowners to take advantage of low refi rates. If homeowners have the opportunity to refi, get a lower interest rate, lower monthly payments, and a better loan overall, it is advised they take this opportunity. As previously acknowledged, it is imperative that the homeowner have a decent credit score and a stable income; in today’s world, this can be contentious. However, with the right information and dedication, a 2021 refinance may be within reach for those who qualify.
With all of this information, it is obvious that refinancing is not as clear-cut as it seems. There are requirements the homeowner should understand before allowing a company or bank to examine their credit score and possibly decrease its worth. In the end, finding the right company or bank, having a steady income and a good credit score are the basics to refinancing in 2021; if the homeowner has evidence of these requirements, 2021 might just be their year.