On March 16, the Fed announced it would stop buying mortgage-backed securities effective March 31. Instead of going up, the mortgage rates reached a new low on the next day. As a result, I’m doing another no-cost refinance to lower my rate by a quarter of a percentage point. I think this really will be my last refinance.
I’ve been following a step-down-the-ladder approach for mortgage refinancing. Whenever I can lower my rate for at least 0.25% with no closing cost (credit from the lender covers closing cost), I would do it because I have nothing to lose. Every time I do it, I save hundreds of dollars a year, every year.
The Fed purchased $1.25 trillion in mortgage-backed securities. The purchase has kept the mortgage rates low. When the life support is withdrawn, the rates won’t necessarily jump up immediately, but I don’t see how the rates will be lower without the support than with the support.
I’m going with the same lender I used last year: National Mortgage Alliance (NMA). I like NMA because their rates and fees are the best I can find for my loan. They also show a transparent trade-off between rates and fees on their website. For example, at the time I’m writing this, NMA shows these for a hypothetical $150k 30-year fixed loan for a home valued at $200k in Missouri:
|Rate||Payment||Lender Fee||Closing Cost||Lender Fee + Closing Cost|
It makes it very easy to compare against offers from other lenders. You either find the same rate and compare the fees or find a similar fee and compare the rates.
I locked my rate at 4.25% with no point and no closing cost for 15-year fixed. With the lessons I learned from last year, I was able to get the automated underwriting system to waive the appraisal. That will save a lot of time and some money.
The refi is scheduled to close by March 31. If it does, it will be one of the fastest closing I’ve ever had.
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