Washington County Weekend Post

GMTODAY.COM SUNDAY, APRIL 3, 2022 • WASHINGTON COUNTY POST • 3A Despite mortgage rates hitting historic lows during the last year, many home- owners still haven't consid- ered refinancing their mort- gage - essentially, replacing an existing mortgage with a new mortgage loan that has new terms and potentially a lower interest rate. Home- owners in lower-income brackets may be convinced they won't qualify for refi- nancing because of high debt compared to income, poor credit scores or lack of savings to cover closing costs. However, new refinancing options are available to help make monthly housing pay- ments more affordable. Fan- nie Mae - which helps make the 30-year fixed-rate mort- gage and affordable rental housing possible for millions of people in America - recently released RefiNow, an option that makes it easi- er for lenders to help eligible homeowners earning at or below 80% of the area medi- an income refinance at a lower interest rate and reduce their monthly mort- gage payment. "Lower-income borrowers typically refinance at a slow- er pace than high-income borrowers," said Katrina Jones, vice president of Racial Equity, Strategy & Impact at Fannie Mae. "Espe- cially for those who have a high- or adjustable-interest rate loan, refinancing may help make housing costs more affordable and sustain- able by lowering their mort- gage payments, reducing the total amount of interest paid over the life of the loan or providing more stable monthly mortgage pay- ments." The new RefiNow option requires that eligible home- owners achieve a savings of at least $50 in their monthly mortgage payment, but they can potentially save up to $100-$250 per month, accord- ing to the Federal Housing Finance Agency. It also offers savings on up-front out-of-pocket appraisal expenses up to $500. "We can put money-saving refinance options in reach for more homeowners by removing some perceived barriers - such as appraisal costs - to improve affordabil- ity and promote sustainable homeownership," said Jones. Jones provided three rea- sons to consider refinancing now: • Interest rates are low - Mortgage rates remain low, despite moderate increases. According to Fannie Mae research, experts expect the 30-year fixed mortgage rate to average 3% through 2021, before beginning to rise in 2022. The takeaway for home- owners: There's still time to consider refinancing. • Lower your monthly mortgage payments - Refi- nancing at a lower interest rate may help decrease monthly mortgage pay- ments, which could increase monthly savings. Refinanc- ing may also help reduce the total amount of interest paid over the life of the loan, depending on the terms of the new loan and the exist- ing loan. • Getting started is a phone call away - Homeown- ers should contact several mortgage lenders to discuss refinance options to find the best option and terms for their situation, and should always compare offers and shop around. More than 3 million homeowners are saving money by refinancing: 3 things to consider Credit is defined as a cus- tomer obtaining services or products before payment with the trust that payment will be made in the future. Credit affords people pur- chasing power they would not have if they had to pay for something outright at the time of checkout. In addi- tion, credit enables men and women to finance expensive automobiles, buy homes or furnish those homes, con- tributing much to the foun- dation of a strong economy. A strong credit history and score is vital to personal finance. The steps people take concerning their finan- ces can greatly affect their credit. Identifying the behav- iors that may be detrimental and those that are beneficial can help customers reevalu- ate their habits and improve their creditworthiness in the eyes of lenders. Payment history The financial advisement resource Credit Karma says one of the most important factors affecting credit scor- ing is payment history. Hav- ing a long history of making payments on time is essen- tial for a strong credit score. Missed payments and a repu- tation for paying late can drive ratings down. It can take some time to recover from late payments. Failure to recognize late or missed payments may result in bankruptcy or tax liens, which are a heavy black mark on credit. Credit utilization rate Credit utilization refers to the amount of credit you have available, based on credit card limits, compared to the amount of credit you're actually using by way of the balances on credit cards, advises the credit tracking company Experian. Lenders prefer to see ratios of around 30 percent or less. To calculate credit utiliza- tion rate, divide your credit card balance by your credit limit. So if your balance is $600 and your limit is $1000, that's a utilization rate of 60 percent. Credit scoring rubrics will determine just how the ratio of new to old accounts and frequency of use will impact your score. Credit scores are important. Understanding them further can help people secure their financial futures. What affects credit score?

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