“For example, I locked in a loan today and the borrower would lose 1.213 points on Monday compared to 0.375 points today. The loan amount was exactly $610,000 and the interest cost went from $7,400 to $3,200 today,” Hoff explain. “With the average mortgage loan size in the U.S. being $405,000, an additional 80 basis points savings could equate to $150 to $250 per month, depending on the overall situation. This can mean a lot to borrowers.
Hoff said the borrowers taking advantage of these rates are those who purchased or received a cash-out refinance within the past 12 to 18 months. Additionally, some borrowers are now considering purchasing or have been prequalified in the last year.
“If DTI is a key factor in pre-approval, they can enjoy lower payments and even qualify for a higher purchase price,” she said.
Hough has issued a “rate alert” recommendation to her clients to “act now so they are ready when rates hit benefit levels.”
Looking ahead, she believes interest rates will fluctuate and “jump all over the place, just like the stock market.”
“Typically, when interest rates come down significantly, we see a correction next week,” Hough said. “I wish that wasn’t the case, but I tell my clients that’s why I’m locking in three loans today.”
Lower fees for VA borrowers
Patton Gade, national director of military lending at UMortgage, said he believes the market has priced in a September rate hike. Instead of keeping interest rates as low as possible, he stacked fees or set up refinances to eat up equity.
“Some will have an eye-watering 5.2 percent rate, but they’ll charge a full point in origination fee and two discount points,” Gade said. “I believe the best way to take care of veterans is to provide loans for little to no cost. Getting the lowest rates at the lowest cost possible is the path I want to take.
As for the future, he doesn’t expect rates to continue dropping to around 6 or even higher.
“You can’t bet your life or your clients’ financial future on what we think is going to happen in the next six, 12, 18 months. What happens is unexpected,” Gade said.
Daniel Sa, Division President NFM loan, said he has been actively communicating with past clients and learning how they could benefit from refinancing. He tells clients they can refinance without lender fees and get appraisal reimbursement.
“Given the recent positive changes in the mortgage rate environment, we believe the next few months, particularly between September and December, will be the best time for our customers to refinance,” Sa said.
“For new customers, we currently offer competitive rates, which reflect both the current market conditions of 6.375% to 6.750% and our expectations for further fee reductions,” he said. “This strategic positioning is designed to ensure that our customers not only benefit from potential interest rate reductions, but are also fully informed and prepared to act quickly to optimize mortgage terms.
“Our goal is to keep our clients ahead of the curve, maximize their financial benefits and increase their overall satisfaction with our services.”
