Hi, I’m Erik Wolfers. I’m the managing member of First & Main Financial. We’ve been helping our clients live healthier and more secure financial lives since 2001. Today I’m going to talk a little bit about home loans
There’s a lot of excitement these days for refinancing and to lower interest rate loans. Rates are at or near historical lows and the reason they’re low is because we have government-sponsored entities, Fannie Mae and Freddie Mac, that will buy up loans and take the risk of the borrower, which makes the money cheaper.
Back in the financial crisis there were all kinds of loans that got package together in crazy ways and that wasn’t super honest and all those crazy ways of borrowing money or lending money have been taken off the table. Now if you want to refinance and get the best deal, you would get what’s called a conforming loan. If you can get a loan that’s at $510k or below that’s a standard conforming, and then $765k is a limit for a jumbo conforming. So, if you can borrow on one of those ranges, that’s the cheapest money available because of the government-sponsored entities that will buy these loans that are packaged up like a security.
Then the cheapest money these days is also available mostly only to the best borrowers. We are in somewhat of a stressed financial time so if you have a loan of $700k and you can lower your rate down to 3% from 3.625% or something like that, your cash flows better, it makes you more stable and a better consumer.
There’s a big incentive for the government to have entities that will make credit available in times when non-public entities might not be able to or might not be willing to take the risk.
It is potentially a great time to refinance. There are some constraints on getting the absolute best rates or getting historical rates, but we do have clients who are investigating it and we’re helping them try to find the best lenders or the companies that are going to give the best service.
If you are looking for some financial guidance; whether for a one time financial plan or continuing advice on your investments, we invite you to meet with a First & Main Financial planner for a free consultation. We would be more than happy to sit down with you, assess your situation and review our services to help navigate your financial future.