More Americans are searching for information as mortgage rates hit record lows
It’s no surprise that more Americans are turning to the world wide web to learn more about their options, especially when it comes to refinancing. On MPA, interest in content related to refinance is up 122% year-over-year. Brokers and agents can use this interest to provide valuable information to existing and potential clients and flex their expertise in this time of uncertainty. Here are some of the most popular online inquiries:
Should I refinance my mortgage now?
Google searches for this question were up 700% compared to last year, which is no surprise considering refinance rates are 40% above average year-over-year.
One of the most common reasons to refinance is to get a lower interest rate on an existing loan, and in many cases, lowering monthly payments. Brokers can share some of the considerations involved in this decision, including how long they plan to stay in the home, how much time has past in their current mortgage, their financial goals, and current credit score.
What is a good mortgage rate?
The average 30-year mortgage rate dropped to a new low last week, hitting 2.86% down from 2.93%. Mortgage professionals should remind homeowners that what makes a “good” mortgage rate is dependent on several factors; with rates constantly changing, borrowers often need help understanding why.
While today’s record low rates are a product of the impact of the coronavirus pandemic on the economy, other factors play into the rate the end consumer would be approved for. This includes personal credit history, the type of mortgage, as well as the lifetime and volume of the loan.
How does it work?
With refinance lending up more than 60% quarter over quarter, it’s no surprise that homeowners are trying to gain a more detailed understanding of what the refinance process would entail. According to new data from Black Knight, refinance lending skyrocketed more than 200% from Q2 of last year, accounting for almost 70% of all Q2 originations by dollar value.
Taking the time to explain the process thoroughly and effectively could open brokers up to new potential business. Homeowners were also curious about all the reasons to take advantage of the boom, whether it’s for lower market interest rates, reducing monthly payments with a longer term, or cashing out a portion of their equity.
Is it a bad idea?
With interest surging, borrowers are curious to understand the potential pitfalls of trading in their current loan terms for new ones. While it can reduce monthly payments and result in less interest over the life of a loan, sometimes the costs can outweigh the savings, especially if selling the property is in the cards. Depending on lender requirements, the cost of refinancing could include bank fees, appraisal fees, attorney fees or title insurance.
Last month, internet searches for a refinance home loan calculator was up by 3850%. These online tools can be used to help determine a borrower’s breakeven point.
What do I need to qualify?
With historically low rates, over 19 million Americans qualify for refinancing, according to a CNBC report.
“When you remove those high credit quality standards, 32 million homeowners with a 30-year mortgage that have a current interest rate three-quarters of a percent above what’s being lent in the market today,” Andy Walden, Black Knight market research director told CNBC, adding that there is a record level of refinance incentive.
To qualify, homeowners would need to provide proof of sufficient income, good credit, among other requirements. Brokers and agents can help the process by reminding borrowers of the required documentation needed to apply, such as up-to-date paystubs, tax returns and W-2s, a current credit report, and statements of debts and assets.
