If you have been hearing or reading about low interest rates, but you’re not sure if refinancing your current loan makes sense, Kasey Hagan and Brooke Pevey with Morris Bank in Statesboro want to help.
“A rate over three and a half percent is a good target that it’s time to definitely look at refinancing,” Hagan, a mortgage originator with Morris, said. “If you bought your home five years ago, even if those were good rates then, they’re not so good rates now.”
But, “Even if you have a loan at 3% or so, come talk to us,” said Pevey, who also is a mortgage originator. “We can run numbers and weigh it out. Show you the different options. Is it beneficial? How much money can you save?”
While specific rates vary according to everyone’s particular financial situation and goals, the rates for a 15-year mortgage could be 2.5% or lower. And whether you’re looking to refinance or get a new mortgage, Hagan and Pevey agree that a 15-year term is usually the best.
“Fifteen years is always the best option because you reduce the lifetime interest you pay by such a huge amount,” Hagan said. “Some people think ‘I can’t do a 15-year payment, it’s going to be double what a 30-year is.’ It’s not double. It’s more, obviously, but it’s not close to double.
“I think sometimes when we give people those 15-year payment amounts, they’re surprised. ‘Oh maybe I can do that.’ Especially with rates as low as they are.”
Other fixed terms – 30-year, 20-year, 10-year – are, of course available, and Hagan and Pevey will work to best understand every customer’s needs and goals to arrive and what works best for them.
“Some people want to look at 10-year mortgages,” Hagan said. “What I tell people is if you want to add more principle to your payments each month, you can do that, but keep the flexibility of a 15-year just in case something unexpected happens.”
Lowering monthly payments or shortening a mortgage, however, are not the sole benefits for homeowners to decide to refinance. Pevey and Hagan said that home values and appraisals have increased more than is typical in the past year, which may create other financial incentives.
“Obtaining a lower rate through refinancing may also allow homeowners to get some cash out,” Hagan said. “We have noticed that because of COVID, people have more time to do home repairs, home renovations. With a refinance, you can cash out and get some money to do that.”
Pevey added, “An advantage could be the loan to value based on your appraisal probably has gone up. It might allow you to get rid of private mortgage insurance, which would also lower your payment amount.”
The lower interest rates also have created a situation for new home buyers where there are fewer homes actually available for sale in the Bulloch County area, which has created a very competitive market. Buyers have found a home they like, but it is sold before they know if they can qualify to buy a home.
Pevey and Hagan can help there, too.
“That’s a big part of getting pre-approved for a mortgage,” Pevey said. “So when you do find a home that you want, you can jump on it immediately. The realtor doesn’t need to say ‘Well, you need to get pre-approved or do we know how much you can or cannot afford.’ So with the hot housing market, or lack of housing inventory, now is when you should be getting pre-approved. Reach out. We’ll get you a pre-approval letter. We’ll send it to your Realtor.”
Hagan and Pevey also want to reassure people considering refinancing but hesitant to do so because of fear of paperwork: Don’t worry.
“I think some people are intimidated by that they think the mortgage process is too difficult,” Pevey said. “They view it as very extensive, not pleasant. But we’re here to give you the numbers and guide you through the whole process.”
“It is not as hard as people perceive,” Hagan said. “It will take a little bit of time and effort, but it will definitely be worth it.”