The Columbia SC mortgage refinancing market has enjoyed months of near-record low interest rates. The rates have stayed so low for so long that many borrowers assumed home mortgage interest rates will be low “forever.” And for good reason. At the first sign of rising interest rates – regardless of how slight the expected increase – the global money markets seemed to force them downward again. Even the rumblings of a Federal Reserve increase in fed funds rates did little to change the feelings of some borrowers who watched mortgage rates remain low throughout the peak home buying months.

The majority of borrowers refinanced in the past year or so while interest rates were low. Surprisingly, however, more than 10% of borrowers throughout the nation have yet to refinance. Of the ones who haven’t refinanced their mortgages, most have home loans with rates at 5% or higher. The average rate of those borrowers in the Columbia SC mortgage refinancing arena who have actually refinanced is roughly 3.5%.

For technicality’s sake, experts say almost 25% of borrowers have mortgages with rates higher than 5%, but many of those homeowners cannot refinance their loans. According to CoreLogic here are the reasons why they haven’t – or are unable to – refinance to save money. For one thing, roughly half of the existing mortgages with higher rates that haven’t been refinanced are delinquent or have experienced a delinquency during the loan period. Because of that, most lenders consider the risk of granting them a new mortgage – even at a lower interest rate – too high.

In addition, existing mortgages held as part of private-label securities portfolios are generally more difficult to refinance than government-backed loans. As a result of the changes made in the aftermath of the housing crash of nearly a decade ago, the U.S. government offered refinance programs designed to be more streamlined. Those programs included a large number of borrowers who were underwater at the time – borrowers who owed more on their homes than they were worth. Again, to be technical the resulting share of borrowers not taking advantage of the interest savings is roughly 13%. Why haven’t that 13% refinanced when they could have? Let’s take a quick look.

The reluctance of the rest of the 13% of borrowers that haven’t refinanced is likely due to the remaining balance on their higher-rate mortgages. A CoreLogic spokesperson speculated that “small balances may not be worth refinancing… the savings would be too low.” And the speculation is probably spot on. Consider this: CoreLogic found that borrowers eligible to refinance with old rates above 7% have an average remaining mortgage balance of only $53,000. Borrowers with rates between 5%-7% had roughly $100,000 remaining on their principal balance. With the closing costs involved in a refinance – even with an existing lender – the question those borrowers need to ask themselves is, “Would refinancing a relatively low balance save me any money?” Closing costs for a refinance can often run 2%-3% of the loan amount, depending on whether points are involved. Let’s take a look and see if the savings are worth the effort.

The quick answer is, it depends on the original mortgage amount. For example, a borrower with an original loan balance of $400,000 can reduce his monthly mortgage payment substantially since the original payment was much higher. If that borrower is refinancing a $100,000 remaining balance, the closing costs are going to be comparatively lower. Conversely, a borrower with an original loan amount of $150,000 who currently owes $75,000 won't enjoy a significant savings on the remaining amount of interest – especially after factoring in the closing costs. In addition, many borrowers simply don't like the idea of extending the term of their loan. A borrower who’s 12 years into an original 15-year mortgage may just want to pay it off as planned instead of recasting the loan term to another 15-year term by refinancing.

As usual, each case is different, so it’s a good idea to talk to a Columbia SC mortgage refinancing professional. Here’s why:

Your mortgage lender can provide you with the remaining balance on your existing mortgage at the original interest rate. In turn, using the original amortization schedule – updated to reflect any principal only payments – the lender can estimate the amount of interest you’ll pay over the remaining life of the loan. Naturally, the calculation is based on the assumption that you won’t pay off or otherwise alter the loan's principle balance. Then, using current interest rates, the lender will determine what a typical refinance will cost in terms of monthly payment versus your existing mortgage payment. The interest portion of the payment when amortized over the new term will give the lender the total amount of interest you’d pay if you refinanced – again, barring any future changes to the principal amount. By simply comparing those two amounts, the lender can determine the interest cost savings. However, that’s not the end of the analysis. As mentioned, the costs of closing the loan have to be figured into the equation to determine the net savings, if any.

Closing costs, though not as high as on a new loan origination to purchase a home, can still be substantial. Though it may seem unnecessary, the lender is required to ensure the home's value is sufficient for the loan amount to be granted. Therefore, either a new appraisal (or, in some cases, an update to the existing appraisal) is required. In addition, you can expect to pay a loan origination fee and an updated title search fee. A new credit report and normal court recording costs will also be required. You may have to pay for an updated termite inspection and a home inspection. After all those costs are taken into consideration, then and only then can your Columbia SC mortgage refinancing lender give you an estimate on the cost savings to refinance and an opinion as to whether it makes financial sense. From there, only you can make the decision.

You can find more articles pertaining to Columbia SC mortgage refinancing and the overall mortgage market in the Columbia SC Mortgage Info section of our site below Columbia SC Real Estate Categories in the column to your right.

We also post daily tips, many of them related to Columbia SC mortgages, on Facebook and Twitter and would love for you to follow us there, too.

Technology and the digital age has certainly made an impact on the Columbia SC mortgage business. While roughly 90% of prospective homeowners search online for a home, less than 10% of mortgage lenders offer a comprehensive digital mortgage experience.  Now, mortgage lenders are starting to enter the 21st Century by gradually reinventing the mortgage process. Here are some ways in which important improvements are occurring.

Columbia SC Mortgage Business – Ushering in Technology

Some mortgage lenders still subject their prospective borrowers to the golden age of copiers, scanners and faxes to assemble and deliver loan application information and financial paperwork. And while the Columbia SC mortgage business has largely been overlooked when it comes to technological advances, it does appear that is changing. Here are the top five ways technology is changing the home mortgage lending process for lending institutions and borrowers.

A better borrower experience.The mortgage lending process from application to closing is, by its very nature, information driven. Some loan files can exceed 500 pages. In an effort to save time, much of the information required by lenders in the Columbia SC mortgage business is available digitally, and applicants can provided bank account information, tax forms and pay stubs online. This not only streamlines the application process for homebuyers, but it also makes the collection and verification steps easier for the lending institution. Since the financial data is independently verified from its source, mortgage lenders are able to more readily confirm that the information is accurate and current, thus saving time in their review and analysis.

In addition, some financial technology companies are offering mobile experiences for prospective borrowers. The mobile apps give the borrowers unique access to the mortgage lending process. The accessibility enables borrowers to stay on top of their documentation needs and requirements, ultimately giving them a better, more satisfying user experience.

Increased transparency. Since applicants don’t have access to their mortgage lenders’ internal systems, they rarely know where they stand during the loan application process. They are then forced to rely on the loan officers to communicate various requirements or updates via phone or email. Some innovative Columbia SC mortgage lenders are now providing information portals for prospective borrowers to be able to see the same information the loan officers do. This improvement in transparency allows borrowers to obtain a complete list of required documentation ahead of time – and to know where they stand with respect to any additional information required. This innovation enables both parties to work together for the common goal of assembling the information in order to get the loan approved and closed in a timely manner.

Making the mortgage process painless. A normal turnaround time for a borrower to receive an underwritten loan approval from a mortgage lender is about 18 days. Overall, it could take roughly 50 days to complete the loan process. Comparatively speaking, in a totally digital world where online shoppers can order an item and get it overnight, 50 days seems like forever.

Technology is helping introduce the mortgage lending process to the modern world. Using a workable combination of intuitive design and direct connectivity, loan applicants are now able to contribute to the process and receive up-to-date assistance from the lending institutions. This makes the borrowers more in control of their own destiny, as well as participating in more of a “team approach” to getting their loan approved.

Digital compliance. Following the housing crash of less than a decade ago, federal regulations required lenders to follow certain lending practices and give their borrowers more disclosure information early in the mortgage loan process. The regulations are designed to allow mortgage lenders to adhere to strict guidelines while limiting negative impact on the borrower experience.

New developments in technology have enabled lenders to automatically send the production and delivery of electronic disclosure information at certain points in time during the mortgage application process. In addition, the natural creation of a digital “paper trail” for audibility and accountability is an offshoot of the new technology.

Money-saving advantages. It’s estimated that it costs around $8,000 for a lender to complete a mortgage from start to finish. Much of that cost is for employees to perform routine, manual tasks such as translating required documentation into email form, as well as the physical tracking of various items on paper documents and forms. In turn, such work inefficiencies are passed through to the borrowers by way of higher fees and other processing or closing costs. Using modern technology can automate manual work and reduce these costs. In addition, lenders are able to increase their efficiency and productivity – passing the cost savings on to their customers.

The advent of workable technological advances in the Columbia SC mortgage business creates faster and more simplified lending interactions. Best of all, the digital “revolution” will likely continue to impact the mortgage industry and improve the borrower experience. While mortgage lending will probably never be a “one-click” process, it can continue to be better, faster and less costly. When you stop and think about it, the digital world has basically spoiled us all. We want – and often expect – goods and services almost immediately. From the digital delivery to a movie or television program on demand, to the ease of online banking, our society has come to expect speed and convenience. It’s only natural that we’d expect the same speed and delivery of improvements in the Columbia SC mortgage business. In addition, mortgage lenders want it, too. That’s why we will continue to anticipate and expect further advances that will make the home buying and home financing process a better experience for all parties involved.

You can find more articles pertaining to the Columbia SC mortgage business in the Columbia SC Mortgage Info section of our site below Columbia SC Real Estate Categories in the column to your right.

We also post tips daily tips, many of them related to the Columbia SC mortgage business, on Facebook and Twitter and would love for you to follow us there as well.

Columbia SC mortgage lenders are anxiously awaiting revisions to the “Know Before You Owe” mortgage disclosure rules. The Consumer Financial Protection Bureau (CFPB) – acting on a promise made this past April – recently released updates to the rules in response to the mortgage industry’s requests for better clarity on the regulations. However, there are still nagging concerns regarding the secondary market, and those concerns will inevitably affect mortgage lenders’ ability to make loans that may not qualify for sale. Here’s a closer look at Know Before You Owe and what it means to the Columbia SC mortgage market.

Columbia SC Mortgage Lenders See Challenges Ahead?

The Know Before You Owe mortgage disclosure rule (also called the TILA-RESPA Integrated Disclosures rule) went into effect in early October 2015. Almost immediately there were serious concerns about how long it would take to close mortgage loans – causing a domino effect of problems for borrowers whose contracts called for timely closings.

While most of the initial wave of problems have been solved, one remaining issue has continued to plague mortgage lenders. The secondary market – where many lenders package and sell their mortgage loan investments to third-party investors, including government entities like Fannie Mae and Freddie Mac – is still experiencing issues with TILA-RESPA. In addition to the addressed changes to the rules below, the industry, at least for the time being, will be required to follow the original intent the CFPB issued saying, “examiners will be squarely focused on whether companies have made good faith efforts to come into compliance with the rule.”

The changes made by the CFPB include the following:

Tolerances for the total of payments.  Prior to the enactment of the Know Before you Owe mortgage disclosure rule, the total of payments calculation and disclosure was arrived at by using the finance charge as part of the equation. The rule amended the total of payments calculation so that it didn’t make specific use of the finance charge. The CFPB now proposes to add tolerance provisions for the total of payments that are similar to tolerances in place for the finance charge and all disclosures affected by the finance charge.

The result?  The change makes the treatment and disclosure of the total of payments consistent with how it was shown before the Know Before You Owe mortgage disclosure rule was enacted.

Housing assistance lending.  The initial rule allowed a partial exemption from the disclosure requirements to some housing assistance loans that were originated primarily by housing finance agencies. The CFPB issued an update that would promote housing assistance lending by stating that certain recording fees and transfer taxes can be charged as a result of transactions while ensuring the partial exemption eligibility would still be in place.

The result?  More housing assistance loans will likely qualify for the partial exemption. That, in turn, will probably encourage mortgage lenders to work more closely with housing finance agencies to fund these type loans.

Cooperatives.  The CFPB proposes to have the rule’s coverage include all cooperative (co-op) units. In a cooperative, the purchaser becomes a shareholder in the corporation that owns the property. The buyer, by virtue of being a shareholder, is allowed exclusive use of a housing unit in that property. As it stands now, the disclosure rule covers only those transactions secured by real property. Real property is defined in individual states’ laws. As such, cooperatives are sometimes considered personal property and sometimes considered real property.

The result?  The CFPB plans to simplify compliance by including all cooperatives in the disclosure rule.

Sharing information and privacy.  The existing disclosure rule requires that creditors provide mortgage disclosures to the consumer. The CFPB has come under criticism and has received numerous questions regarding sharing the consumer disclosures with third parties to the transaction – including real estate brokers and sellers. The CFPB has decided it’s appropriate for creditors and others involved in the transaction to receive the closing disclosure.

The result?  The CFPB is working on a separate disclosure form to the consumer and the seller to rectify what has been deemed a problem.

Columbia SC mortgage lenders in conjunction with the Mortgage Bankers Association (MBA) have expressed their appreciation in the CFPB’s efforts to update various parts of Know Before You Owe. MBA president and CEO David Stevens said the “regulation has a big impact on both borrowers and lenders, so it’s important that the Bureau and stakeholders continually reassess the implementation process to ensure its effectiveness. We look forward to commenting on the rule, and continuing to work with the CFPB to gain further clarity in order to improve this and other rules and regulations.”

In addition, the National Association of Federal Credit Unions (NAFCU), while appreciative of the DFPB revisiting the disclosure rule, remains concerned that the changes may not be as far reaching as they need to be. The NAFCU feels the CFPB hasn’t fully addressed the many compliance issues expressed by credit unions.

The CFPB has encouraged a wide range of input from its stakeholders – including Columbia SC mortgage lenders – and has invited public input on their proposal. Comments and information submissions are due in mid-October and will be thoroughly considered prior to final regulations issued.

What this may ultimately mean to the mortgage lending industry is this. In the absence of greater clarification on issues that are pertinent to the entities to which lenders sell their mortgage originations on the secondary market, some lenders will either choose to limit the number of loans they sell, or restrict their lending activity to only those loans that are easily marketable. Examples would be loans with lower LTV ratios or loans made to borrowers with excellent credit scores and high net worths.

However, most Columbia SC mortgage lenders remain confident the changes the CFPB will be sufficient enough to solve the nagging questions that currently remain regarding the secondary market. If that is indeed the case, the mortgage market will likely not be adversely affected.

You can find more articles pertaining to Columbia SC mortgage lenders and the mortgage market in the Columbia SC Mortgage Info section of our site below Columbia SC Real Estate Categories in the column to your right.

We also post tips daily tips, many of them related to the Columbia SC mortgage market, on Facebook and Twitter and would love for you to follow us there as well.

The Columbia SC mortgage market is abuzz with talk about refinancing. With 30-year fixed rates approaching all-time historical lows many economists say this could be the best time ever to refinance your mortgage – even if it’s only a few years old with what was a great interest rate at the time. Recent turmoil over Great Britain’s departure from the European Union caused stock markets around the globe to nosedive. When the stock market is weak, interest rates generally stay low. As one analyst put it, “Financial turmoil can be awfully good for mortgage rates.” Let’s examine why it may be a good time to refinance and where Columbia SC mortgage rates may go from here.

Columbia SC Mortgage Activity: It’s All About Refis

Uncertainty in the market is causing investors to sell off their riskier global stocks in favor of safer U.S. mortgage bonds. Mortgage bonds are considered among the the most secure in the world market because they’re made up of home loans made in the U.S. following the most stringent guidelines in decades. When the bond prices go up, the bond yields or rates go down. When this occurs, it’s usually a good time to take a look at your mortgage and consider refinancing.

As an example, just a slight rate decrease of .25% would decrease your monthly payment by $42 on a $300,0000 mortgage.

While Columbia SC mortgage interest rates have been low for several years, many homeowners have recently gained a great deal of home equity, thanks to fast-rising home values. Not only are they eligible to refinance, but they may choose to access some of their new-found equity. The mortgage market may very well have a refinance boom similar to that from 2008-2014, when roughly 25 million borrowers refinanced their mortgages, according to a new report from the Urban Institute.

If you’re thinking of refinancing – and we think you should be – here are a few tips we recommend.

Make sure your mortgage lender is quoting you the correct rate. Rate quotes are dependent on your loan closing and finalizing in a certain number of days. If you need a longer rate lock period you’ll likely pay a higher interest rate. Should you find a rate quote that’s lower as you’re shopping around, ask the lender about their rate lock time period. Make sure they are able to close your loan within that timeframe.

Confirm the timing. As more people elect to refinance, Columbia SC mortgage lenders will get very busy. Ask your lender for confirmation that they’re giving you a rate quote that gives them enough time to close your refinanced mortgage. If they can’t do that, find another lender.

Remember your second mortgage (if you have one.) If you have a second mortgage on your home – even if it’s a Home Equity Line of Credit (HELOC) – the second mortgagee has to agree to the terms of the new first mortgage before you can close the refinance.

Prepare your documentation again. It may sound crazy, but even if you’re refinancing with your existing lender, the federal regulations require them to verify and update employment, income, asset and debt information all over again. So be prepared to go through pretty much the same process you did when you took our the previous mortgage loan.

What About Columbia SC Mortgage Costs?

You should make a point to discuss the break even point of refinancing with your Columbia SC mortgage lender. Refinancing usually costs between $2,000 – $4,000 depending on your market and the lender you choose. Typically, interest cost savings as a result of a refi should mean your break even point would be sometime between 2-3 years. Another tip to remember: a “no cost” refinance isn’t really free of any costs. The borrower is being given a slightly higher rate in order for your lender to, in effect, finance the closing costs. Ask your lender to help you with cost comparison analyses to find out what your costs are compared to what your interest rate savings will be. If you’re planning to sell your home sooner than the 2-3 year average break even period, you may want to rethink your refinancing plans.

Although yields on the 10-year Treasury bonds – which Columbia SC mortgage interest rates follow somewhat – will need to remain low for a while before mortgage rates drop markedly lower, it’s definitely worth watching rate activity and planning for a potential refinance.

Whether you ultimately elect to refinance your current mortgage or not, mortgage experts suggest you weigh your options carefully. If rates do continue to drop, they could possibly drop even more. Decide what rate you can best be satisfied with. Many times in falling rate markets, prospective borrowers keep waiting and waiting for rates to go lower. Then, when they begin to rise, an unprepared borrower may actually end up paying slightly more than he could have if he had acted quicker. Our suggestion: don’t be greedy. If you like the new interest rates once they fall – if they do – then refinance. If you’ve done your homework, you’ll still save money in the long run.

You can find more articles pertaining to the Columbia SC mortgage market in the Mortgage Info section of our site below Columbia SC Real Estate Categories in the column to your right.

We also post tips daily tips, many of them related to the Columbia SC mortgage market, on Facebook and Twitter and would love for you to follow us there as well.

Columbia SC mortgage holders agree, a mortgage is probably the single largest financial obligation most American homeowners will ever assume. Unlike personal loans, car loans or other consumer loans, the interest rate on a home mortgage loan can add up to a substantial amount over the life of the loan. Conversely, the lower your mortgage interest rate, the more you can save over time. For example, on a mortgage loan amount of $250,000, half a percentage point (.5%) can represent a $23,427 difference in the interest amount paid for the life of a 30-year fixed-rate loan.

Columbia SC Mortgage Search: Rating Rates

In today's digital lending environment, most mortgage lending institutions have made it easy and convenient for borrowers to go online to get information on interest rates, different loan programs and answers to their money questions. Of course, you may still want or need to work with a mortgage broker to assist you in the borrowing process. This is especially true if you have credit concerns, blemishes, bad credit or non-standard sources of income. Most mortgage brokers can offer options available with different lenders to find the best product and service for your specific financial situation. Plus, brokers are often able to find the best interest rates because they search a variety of sources on your behalf.

So, how do you get the lowest interest rate on the Columbia SC mortgage that best meets your needs? Consider these tips from seasoned mortgage brokers.

Tie up any loose ends on your personal finances.
Cleaning up your financial situation prior to applying for a mortgage will help you find a lower interest rate. If your credit score needs a little boost, plan ahead to raise your score by paying your monthly obligations promptly when due, avoiding adding new debt or additional credit accounts, and periodically checking your credit. By checking your credit report on a regular basis, you can better manage or correct any errors that may appear. It's better to address them ahead of time rather than dealing with them during the loan application process.

When it comes time to figure out how much money you qualify to borrow, the mortgage brokers offer this advice. Mortgage lenders analyze your debt-to-income ratio by calculating the relationship of your total liabilities to your gross income. So, brokers suggest, lower the amount of debt you owe by paying down or paying off credit cards, student loans, or other consumer debt to be able to afford a higher priced home. The normal accepted debt-to-income ratio for qualified borrowers is a maximum of 43%. In other words, your total monthly obligations –including the PITI payment you're seeking – should not exceed 43% of your gross monthly income.

In addition, it's important for borrowers to fully understand the relationship between their overall mortgage qualifications and the resulting mortgage interest rate and terms. Among the qualifications are income, job history and stability, other available assets, liabilities, credit score, and source of down payment. Borrowers with good qualifications are likely to enjoy the lowest interest rates available in the Columbia SC mortgage market. Those borrowers are considered by lenders as prime customers based on their ability to repay the debt, and are rewarded with the best rates and terms.

Make the best choice on rate type.
One important decision that most borrowers face is whether to obtain a fixed-rate loan or an adjustable rate mortgage (ARM.) While fixed-rate mortgage loans – as the name implies – have a locked-in interest rate during the life of the loan, an ARM starts with a fixed rate period that typically is lower, but after the prescribed period the rate can vary based on market volatility. The interest rate could increase or decrease.

Both loan types have their advantages and disadvantages. The low cost of ARMs offers a degree of appeal during the initial period, yet because the rates can increase it can make some borrowers uneasy. Fixed-rate loans offer greater rate peace of mind, but can be more expensive in the long run. Usually the deciding factor, according to mortgage brokers, is the length of time the borrower plans to stay in the home. If a borrower plans to own the home for a period of, say, 5-7 years, an ARM may be the best choice. For a borrower planning to stay in the home for a longer period, a fixed-rate loan could better suit his needs.

Consider the term of the loan.
The term of the mortgage loan is also a key component in affordability and in obtaining a lower interest rate. The shorter the loan term, the lower the interest rate. However, with the shorter term and lower rate comes higher monthly payments. For borrowers contemplating a shorter term with higher payments, consider this. If you have a personal financial emergency and are already near or at the maximum payment for which you qualify, the emergency may temporarily impact your ability to repay. Most mortgage experts recommend taking the longer term and – as additional finances permit – make additional principal payments. That way, the loan will be paid down as if it had a shorter term. Simply put, you can always pay down the loan and even pay it off ahead of schedule, but unless you refinance the entire mortgage, you won't be able to reduce your payments once you sign the promissory note.

You can find a lot more Columbia SC mortgage information in our Columbia SC Mortgage Info section of articles to your right just below the Columbia SC Real Estate Categories. We also constantly update mortgage news on Twitter and Facebook. We hope you'll check us out there, too.