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4 tips for refinancing your mortgage during the pandemic, from homeowners who just did it


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4 tips for refinancing your mortgage during the pandemic, from homeowners who just did it

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective.We asked three people who refinanced their homes during the coronavirus pandemic to give tips for…

4 tips for refinancing your mortgage during the pandemic, from homeowners who just did it

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective.

  • We asked three people who refinanced their homes during the coronavirus pandemic to give tips for homeowners who want to do the same.
  • Rates are fluctuating more quickly than usual, so they suggested shopping around to find the best rate — and researching through a variety of sources, such as comparison sites and mortgage brokers.
  • Rather than just choosing the lender with the lowest rate, you should also compare your top choices’ fees.
  • If you’re worried about contracting the coronavirus, be upfront about your safety standards, and don’t do anything that makes you uncomfortable.
  • Coming soon: the Personal Finance Insider newsletter. Sign up here »

Refinancing your mortgage is a whirlwind in the best of times. During the coronavirus pandemic, the process can be even more hectic than usual with fluctuating rates, anxiety about germs, and loss of income.

We talked to three people who refinanced their homes during the outbreak and asked them for tips.

Chris Hutchins’ 10/1 ARM was coming to an end, so he refinanced his San Francisco home to lock in a low rate for longer, and he plans to invest the money he’s saving to earn even more.

Andrea Woroch lost income from a client and a rental property due to the coronavirus, so she refinanced for lower monthly payments to create a financial cushion.

Justin Herndon’s daughter is immunocompromised, so when he and his wife found out they had to sign the closing documents in person, they almost backed out of refinancing to keep their daughter safe from the coronavirus — until their title agent made special accommodations for their family.

All three homeowners had tips for how others can refinance their homes to save money, while staying safe.

1. Shop around for rates and lenders

Although mortgage rates are at historic lows overall, rates are bouncing up and down in response to factors like the federal funds rate and the influx of applications. To make sure you’re getting the lowest rate possible, Hutchins and Woroch both suggested searching for the best lender.

“I think a lot of people just may go to their loan officer that they’ve worked with in the past or that someone recommended, and just assume that the interest rates are the same at any loan lender that you go to,” Woroch said. 

Under normal circumstances, you may look at mortgage rate comparison sites to find the best rate. But if you’re interested in a specific lender and can’t find its rates on comparison websites, that doesn’t mean you should give up on that institution. Hutchins recommends calling the lender directly.

“A lot of financial institutions seem to have de-listed themselves from these comparison sites,” he said. “So even though I looked at some of those sites and then found terrible rates or no rates at all, you could still reach out to those institutions and they might actually have reasonable rates.”

2. Search for lenders through a variety of sources

There’s more than one way to find a refinance rate. To find the best APR during the coronavirus, Hutchins recommended trying three sources when you shop. “There’s real mortgage brokers, there’s online mortgage brokers, and kind of just going directly to the institutions,” he said.

“I would do all of those things,” he continued. “The game is to find the best rate, and the best rate is not at the same place, at the same time, or for the same person.” 

3. Ask about fees

Woroch and her husband ended up going through the credit union they used to take out their first mortgage to refinance their home — but it wasn’t for lack of research. Woroch found a slightly lower rate at another credit union, but the fees would have been higher.

Because they had taken out their first mortgage only a year and a half ago, their original credit union still had the couple’s appraisal information on file. They didn’t have to pay hundreds of dollars for another home appraisal.

The company would have charged $800 for an appraisal fee. For Woroch’s family, saving hundreds of dollars when cash was tight was worth paying a little more toward interest.

“Ask about any fees,” she said. “You might find a lower rate at one lender, but they may charge you additional fees out of pocket, origination fees, and all that.”

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4. Stick to your safety standards when you can

Herndon’s three-year-old daughter, Ryleigh, has respiratory complications, so he and his wife have been in strict quarantine to ensure Ryleigh isn’t exposed to the coronavirus.

They almost called off their home refinance when they found out they couldn’t sign closing documents digitally. But their title agent suggested she come to their home during Ryleigh’s nap time, sit in the yard eight feet away from where they sat in their screened-in porch, and read through the document aloud together. This way, everyone stayed apart, and no one touched the same items.

In the end, the Herndons agreed to their title agent’s compromise. “Make sure that you are 100% comfortable with it,” he said.

“There’s not enough Lysol wipes or dollar bills that will make you comfortable … in my opinion,” he continued. “So you just have to kind of marry those two — what makes you comfortable and what’s the right thing financially. And know that there will be another opportunity. It might be better, it might be slightly worse, but everything that you’re reading these days makes it sound like this is going to be the environment for a while with rates.”

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