US Mortgage rates at 50 years Low

THE US MORTGAGE RATES ARE AT A 50 YEAR LOW.

The reports have highlighted that many people in the US are refinancing their

home loans at an unprecedented level. They can typically safe a few hundred

dollars off their monthly installments. These days, a few hundred dollars

extra in a household is useful.


IS REFINANCING COMMON?

Refinancing is very common in the USA and Australia and many western

countries with a highly developed Property and mortgage market. It is still

not main-stream in Singapore as awareness is still not that high for

Refinancing.


IS REFINANCING DIFFICULT?

Refinancing is not that simple, neither is it that difficult. Anyone who can set

aside 5 to 10 working days reading, talking to bankers, corresponding,

sending documentation, etc., can do it. It is tedious, that is part of the reason

why people do not always do it.


WHAT ARE THE THINGS TO LOOK OUT FOR IF I DO IT MYSELF?

Here are the things we feel you should look at.

First, be honest with yourself and get a financial bearing of you and
family. Assess whether the current bank loan protects you

adequately in terms of loan repayment serviceability. Then you

can branch out to things that affects Loan repayment

serviceability. I.e. What if I change employment and I receive less

pay in the new job, can I still pay the mortgage? What if my child

goes to college and need funds, will it affect my ability to service

the loan? Be as exhaustive as possible with the scenarios. After

this exercise, you will get a pretty clear picture of what affects

your ability to service your loan.


2nd thing, never assume anything. If today you have a 20 years tenure
Some people will think, it's okay, I can always go to the bank to

extend my loan tenure if I need an easier repayment schedule.

That is not always the case.


Work out the possible cost savings.
Understand the minor differences in the clauses, legal clawbacks,
Repayment penalty, pre-payment penalty, legal subsidy, fire and

insurance subsidy, mortgage insurance, Repayment penalty

subsidy. Loan benefits and risks. Features Benefits and risks.

Some of the possible features are (non exhaustive list): -

Overdraft, Term Loans (Cash out), Construction loans,

Renovation loans, Interest offset savings account, combination

packages, Interest only loans, Variable Sibor Pegged rates with

fixed repayment, fixed rate loans for 1 year, 2 years, 3 years,

even 10 years...

Read more

READ MORE