Jim Marchese Shares unique perspective on Mortgage Rates in a Volatile Economy
SHREWSBURY, NJ / ACCESSWIRE / May 20, 2020 / Mortgage rates and programs will fluctuate in a volatile economy depending on changes in economic factors. When there is a decrease in economic growth it typically brings interest rates down; however, this may not be the case during the current coronavirus crisis. In fact, cashout products and jumbo products have seen a significant rate increase. Jim Marchese, the CEO of Mortgage NOW, notes that the coronavirus has created unprecedented challenges for homeowners and lenders.
The Federal Reserve is the driving force behind controlling interest rates and reining in inflation by adjusting the supply of money in a fluctuating economy. With the Federal Reserve temporarily soothing the mortgage market with rates remaining consistent, there is still some question as to what the recovery plan looks like. A key driver for keeping mortgage rates consistent is the tightening of underwriting standards by banks and lenders in response to the historical number of unemployment insurance claims caused by the economic losses following the COVID-19 pandemic. If you have a question and reside in New Jersey, Maryland, California or Pennsylvania call Jim's office at 732-460-9388.
Is Forbearance the Best Choice During an Economic Crisis?
For homeowners facing a big reduction in income due to coronavirus-related hardship, mortgage professionals such as Jim Marchese advise that while forbearance can make sense there are some downsides. While forbearance doesn't immediately hurt your credit score, it will show up on your credit report. This will affect your ability to qualify for a loan now and up to several years into the future. Another downside of forbearance is this has the unintended effect of increasing the loan amount you owe as well as your ratio of debt to available credit affecting your credit score which may also affect your ability to qualify for loans in the future. If you have a question and reside in New Jersey, Maryland, California or Pennsylvania call Jim's office at 732-460-9388.
"Our firm has programs which two month off of your mortgage payment without deferral, shorter mortgage terms all to avoid the negative consequences of forbearance. It's important to remember that mortgage rates are incredibly low and even if they do move higher due to the coronavirus, you will still benefit from a great long-term interest rate with a shortened term." - Jim Marchese
Finding the Balance for Lenders
Mortgage lenders such as Mortgage Now consistently monitor the construction and sale of new homes. Coupled with those looking to refinance, if sales and building activity stay steady in the real estate industry, the demand for mortgages borrowing will affect mortgage rates. Refinancing is also a good option in this volatile economy. If you can shave a half to three-quarters of a percentage point off your mortgage rate you should look into it. Marchese says there is a need to recalculate repayments over the long-term to ensure the savings offset the costs of refinancing. If you are planning to sell in the near future, then this is probably not a good option right now.
Wiping out credit card debt is another strategy Jim Marchese suggests. If you go with a cash-out refinance option, you can use the cash to reduce credit card debt which carries a much higher interest rate and shorten your term. The lower interest rate coupled with the shortened term will save tens of thousands in interest and put your balance sheet back in balance. If you start to miss mortgage payments, your credit and options drop and you could even lose your home to foreclosure. With 55% of experts saying interest rates will go up, 27% saying it will remain the same and only 18% say they will go down, its best to explore the best mortgage options for your current circumstances as you navigate your way through the effects the coronavirus has on this fluctuating economy. If you have a question and reside in New Jersey, Maryland, California or Pennsylvania call Jim's office at 732-460-9388.
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