The trend in real estate investing strategies changes from time to time, depending on the current social and economic situation. Sometimes flipping houses are the hot trend, but maybe wholesaling, bird-dogging, and different strategies on other occasions. During the COVID-19 pandemic, one of the investing techniques that rose into fame is refinancing.
A report from ATTOM Data Solutions shows that in terms of refinancing, 1.69 million refinance mortgages secured by residential properties originated in the second quarter of 2020. This result is up by almost 50 percent compared to the same period in 2019. Most people are considering refinancing due to lower interest rates. Here are the pros and cons of refinancing your home during the pandemic:
Pros
1-Lower interest rates
The government has implemented measures to help the economy cope up with the effects of the pandemic. In March, the average 30-year mortgage rate hit a record low of 3.29%. With the interest rates hitting rock-bottom, there are possibilities that you may shorten your repayment terms, which can help you pay off the mortgage faster.
2- Potential cost savings measure
Refinancing homes may give you other benefits aside from a lower interest rate. For instance, if your original loan is an adjustable-rate mortgage (ARM), you can refinance your plan to a fixed-term. Refinancing homes can also give you an option to shorten repayment terms based on your agreement.
Cons
1- Process may take longer
The rising number of people available to refinance homes results in a more extended period for the application to be processed. The backlogs are also aggravated by some companies shifting to a skeletal workforce or work from home arrangements.
2- Stricter credit score requirement
Most lenders increased their credit score requirements in response to the demand for home refinancing during the pandemic. Most banks are implementing tighter standards and restrictions.
Refinancing homes is one of the available options that you may do after examining the pros and cons of making this decision. You may check our marketplace if you need the services of association, coaches, funding, vendors, and other real estate professionals. Feel free to read more investment articles HERE.
Sources:
https://www.doughroller.net/personal-finance/should-you-refinance-your-mortgage-during-the-pandemic/
Credits: Shenoah Grove is a licensed Texas Realtor and Broker. She has transacted over 1,000 real estate desks and trained thousands of Texas real estate investors. She actively invests in single-family homes and commercial real estate throughout Texas. Shenoah created associations throughout Texas with monthly meetings in Austin, Dallas, Houston, and San Antonio.
Disclaimer: The blog articles are intended for educational and informational purposes only. Nothing in the content is intended as legal or financial advice.
