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Should You Buy a House Now or Is It a Good Time to Refinance?

Written by:
Director of Education and Corporate Communications

Helping homebuyers and homeowners get ahead of rising interest rates.

For the first time in more than 18 years, the Federal Reserve has raised interest rates. These rates are being pressed higher as an inflation-fighting measure. That’s good news for homebuyers facing skyrocketing home prices and the serious home affordability gap we’ve seen in the past two years. At the same time, it also means rising mortgage costs for those homebuyers, as well as homeowners thinking of refinancing.  

With that in mind, Consolidated Credit’s housing team is here to help. Whether you’re looking to buy a new home, or refinance the one you’re in, Consolidated Credit’s housing team has answers. We also have a number of programs and upcoming events that can help you, too. To speak with a housing counselor today for free, please give us a call at 1-800-435-2261.

Understanding the cost of buying or refinancing a home

Rising costs for homebuyers

Mortgage rates are likely to increase because they follow the direction of the Federal Funds Rate, and predictions anticipate they’ll trend upwards all year.  This is bad news for those searching for a home because interest rates may be even higher by the time you get an offer accepted. Interest rates cannot lock in until a contract to buy a home is in place. This drastically reduces your loan amount, leaving you in a weaker position to make a successful offer.

Common costs for buying a home:

Purchase price (base cost):Varies, depending on the agreement reached with the seller
Lender fees/mortgage costs:
3% – 20% down payment, alongside .5% – 1% of the loan for origination fees
Inspection:$300 – $500 (additional charges for optional inspections)
Appraisal:$300 – $500
Title:$2,000, though can vary
Insurance, property taxes, and HOA fees:Vary greatly, available to you prior to submitting your offer
Maintenance:Varies from community to community, or left to do yourself

Rising costs to refinance

  • Rate-and-term refinancing changes your interest rate, the term of the loan, or both without the advancement of any new money.
  • Cash-out refinancing is when an existing mortgage gets replaced with a new one but comes with a larger amount than previously owed, allowing borrowers to use their mortgage to get cash.  It’s a form of home equity borrowing. As interest rates rise, it decreases the number of homeowners who can refinance to a lower interest rate. Thereby denying them the opportunity to decrease their monthly payments.

Common costs for refinancing a home:

Application fee:$75 – $300 (could be more)
Origination/underwriting fee:.5% – 1.5% of principal loan
Recording fee:*Depends on location*
Appraisal fee:$300 – $400 (more expensive for larger properties)
Credit check fee:$25+
Title services:$700 – $900
Survey fee:$150 – $400
Attorney/closing fee:$500 – $1,000

If you need help assessing those costs, reach out to one of our certified housing counselors today 1-800-435-2261. We’ll look at your financials and determine where your financial health stands. If you need help saving up for these costs, we can help you create a budget to reach your goal.

Homebuyers: Should you buy a house now?

If you can afford the upfront costs of a house, it does make sense to buy now. While interest rates are climbing back up from their record lows, this is helping to lower the home sale prices. The lower the sales price, the lower the upfront costs will be. However, there are currently programs that help you afford these costs.

Sandra Tobon, Consolidated Credit’s Director of Housing and Community Outreach explains…

“The home-buying process is not easy. It takes time. You don’t want to just go to the bank and see if you are approved or not it’s not the right process. Instead, call us and start getting educated and familiar with the process. There are many components that are part of our first-time homebuyer program.”

Sandra tobon, director of housing counseling & community outreach at consolidated credit

If you are thinking about buying a new home, now is the time to start. If you are stuck and don’t know where to begin, the first-time homebuyer program is a good place to start.

online homebuyer orientation

We also invite you to join us online for a free homebuyer orientation class that can help you get started.

Homeowners: Is it a good time to refinance?

For many homeowners, now is still a great time to refinance. While no longer at the record lows of recent, mortgage rates are still low by historical standards. When you consider that dropping your rate 1% puts back almost 10% of your payment into your pocket, it’s easy to see why people are still doing it.

However, the savings needs to outweigh the closing costs. You do have refi closing costs to pay and need to consider the fact you are agreeing to the start of another long-term mortgage.

Should you need help assessing the costs, to see if refinancing is worthwhile, don’t hesitate to reach out to one of our certified housing counselors today.

“I know a lot of people that took full advantage of the refinancing process, three or four months ago when interest rates were low. However, if you pull the note from your bank and you have an interest rate of eight-point something and you’re going to lower it to five, that is a big change. So, everything depends on the interest rate you have right now.”

Free webinar helps you save money either way

Consolidated Credit is hosting a free webinar at the beginning of June for National Homeownership Month. This webinar will help homebuyers find smart ways to save money, as the real estate market continues to be advantageous for sellers. It will also explain the costs and how to save if you plan on refinancing your home.

If you haven’t already done so, make sure to sign up for our free, “Buy or Refi: How to Save Big Either Way” webinar today.

Webinar On Demand

Buy or Refi: How to Save Big Either Way

Whether you’re looking to begin your buying journey or if you are looking to refinance, there are many ways you can save a dime. It all begins with a little budgeting…

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