In Wake of Covid-19, Federal Reserve Cuts Rate to Zero, Mortgage Rates More Likely to Fall Again
Our hearts go out to everyone who has been fighting this ongoing battle with Covid-19. It’s definitely not the end of the world. We all are closely monitoring the situation and we’ll all get through this, TOGETHER.
While we do that, we need to stand tall and follow the guidelines and precautionary measures revealed by the World Health Organization (WHO). Government authorities, all across the world, are trying to keep their economies stable by bringing out almost every major trick in their bag. And that’s exactly what happened this Sunday.
There hasn’t ever been a better time for refinancing than now
And that’s exactly what Florida Title Center will help you out with. Before we even begin, let’s shift our focus towards the recent announcement made by the Federal Reserve.
On Sunday afternoon, the Federal Reserve announced that it’d be cutting the interest rates to zero, in order to combat the economic impact as a result of the deadly coronavirus pandemic. The Fed will start buying $200 billion worth mortgage-backed bonds, which will play a major role in stabilizing and likely lowering the mortgage rates.
According to Fed Chairman Jerome Powell:
“The actions we have announced today will help American families and businesses, and indeed, our entire economy weather this difficult period and will foster a more vigorous return to normal once the disruptions from the coronavirus abate.”
In order to combat coronavirus’ economic impacts, the central bank is keen on utilizing its “full range of tools” and this move is a part of the brand new $700 billion round quantitative easing.
Two weeks ago, the mortgage rates fell down to a record low. However, due to the lenders being flooded with refinancing applications, investors in mortgage-backed bonds backed off, resulting in the mortgage rates jumping additional 50 basis points in just a single day. This caused the mortgage rates to hit the January high in the past week.
However, after the Fed’s latest announcement on Sunday, things will definitely be taking a reverse turn and we’ll likely witness mortgage rates falling off once again.
With mortgage rates likely to fall off in the near future, the question we often hear from homeowners in South Florida is,
“Should You Refinance?”
Before we even begin, let’s make sure that we are on the same page and have a better understanding of the entire concept.
According to Investopedia,
“Refinancing a mortgage refers to paying off an already existing loan and replacing it with an entirely new one.”
Refinancing is the replacement of an existing debt obligation with another debt obligation under different terms.
Listed below are the reasons why homeowners prefer to refinance:
- Shorten Mortgage Term
- Obtain Lower Interest Rate
- Convert from An ARM to A Fixed-Rate Mortgage
- Convert from A Fixed-Rate Mortgage to an ARM
- Consolidate Debt
- Tap into Home Equity for Financing A Large Purchase
The costs of refinancing come in two varied forms:
- Fixed Costs Associated with Any Mortgage: Title, Appraisal, Property Insurance, etc.
- Lender’s Fee (Lenders Can Set Their Own Fees)
Why Should You Hire A Title Company When You Refinance?
When you refinance your home, your old loan is paid off and as a result, the lender’s title policy expires. Hence, when you refinance, your lender will require a new loan policy on your new mortgage in order to protect their investment. The title company will issue the loan policy and handle the closing for your refinance.
If you decide to refinance your mortgage, the first step that the lender will take is to hire a title company. They will be asked to confirm that you are the true legal owner of the property.
Right from conducting the initial research to preparing the settlement statements, a title insurance company plays a vital role in the entire refinancing process. The title insurance agency will be involved in the funds’ disbursement as well. Title insurance companies act as a liaison between various parties such as borrowers, lenders, government employees, surveyors, attorneys, etc. Various steps are involved in the refinancing process. All along the way, there might be tons of hurdles that you’ll be facing. In order to keep the entire process smooth, a title company acts as an intermediary and works with everyone involved.
Settlement fee as low as a flat $499.00!
With interest rates predicted to fall off very soon, there’s never been a better time to do refinancing than now. At Florida Title Center, not only will we help you smoothen the entire process, but we’ll be charging a settlement fee as low as a flat $499.00.
Moreover, we work with the best lenders and brokers in the market to help you find the best refinancing plan.
Contact us TODAY!