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  • Capital One mortgage rates: What you need to know before refinancing

    Current homeowners have noticed the steady incline of refinance rates over the last several months. This uptick in rates is causing an urgency for people who own homes to refinance to take advantage of the low rates. Mortgage lenders are increasingly competitive as they work to gain the favor of consumers. Capital One mortgage is among these lenders, offering a flexible mix of mortgage and refinance rates to meet a variety of needs.

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    Refinance rate products currently offered by Capital One

    The bank offers both fixed rate and adjustable rate mortgages. To check Capital One’s current mortgage rates visit their website directly.

    Traditional fixed-rate refinance offers

    • Capital One 15-year fixed-rate mortgage
    • Capital One 30-year fixed-rate mortgage

    Let’s say that a 30-year-old borrower is buying a house for $160,000. If this homeowner had the option between a 30-year loan at 5 percent or a 15-year loan at 4.5 percent, what would the price difference mean?

    A 30-year term would give a monthly payment of $859 and over the life of the loan, the borrower would pay $149,211 in interest. With 15-year loan arrangement, the monthly payment would be $1224, paying $60,318 in interest over the life of the loan.

    The 30-year term lowers the monthly payment but will cost $88,893 more in interest over the life of the loan. A 30-year mortgage might also lengthen the time commitment for payments. This debate is one of the most common when it comes to determining which traditional refinance option makes sense for a homeowner.

    Adjustable rate mortgages

    • 5-1 ARM
    • 7-1 ARM

    ARM loans are a smart decision for several types of buyers. Often homeowners who have a jumbo loan consider refinancing with ARMs. It’s also common for homeowners to refinance with an adjustable rate mortgage if they will sell their home within a few years. The initial rate on an adjustable-rate mortgage is usually lower than on a fixed-rate mortgage which makes it an attractive short-term solution.

    Cash-out refinances

    With cash-out refinancing, you refinance your mortgage for more than you currently owe, then keep the monetary difference to help fund a project or major finance. For example, if you owe $70,000 on your home and want to refinance to help fund a project that is $10,000, you can refinance the mortgage for $80,000.

    The goal is to get a better rate on the $70,000 that you owe through a lower interest rate, and get a check for $10,000 to finance your project.  Most often, you won’t have to pay closing costs for a home equity loan.

    FHA or VA loans

    Capital One offers FHA loans, but at this time you can only secure them through a branch location, and only certain states apply. Capital One doesn’t offer Veterans Affairs loans or U.S. Department of Agriculture loans. This may be a deterrent for some borrowers.

    Capital one refinance mortgage rates

    Capital One 360 mortgage refinance rates are competitive in the space. (Photo/Yelp)

    Capital One mortgage rates, when does it make sense to refinance?

    Individuals who currently own homes are also able to take advantage of low interest rates by refinancing their mortgage. The most obvious benefit of refinancing is the ability to reduce monthly house payment obligations.

    Other perks include the ability for a homeowner to draw on their home’s equity with a line of credit (HELOC) Obtaining home equity loans enables the consumer to consolidate several other debts under a single monthly payment, or may even enable them to make a large purchase or make an addition to their home.

    What are some other reasons to consider refinancing?

    • If your credit score has improved since your purchase mortgage
    • If the equity in your home has increased with the housing market recovery.
    • If you secured a loan in 2008 or earlier when interest rates were 6 percent and higher.
    • Refinancing an ARM mortgage to a fixed rate mortgage for more security, and potentially lower rates.
    • Refinancing may also help a homeowner pay their home mortgage off sooner by refinancing for a shorter term.

    How does Capital One compare to other banks?

    Capital One vs. Wells Fargo

    Capital One offers a variety of refinancing products, but their loan terms are less broad than other banks, including Wells Fargo. Capital One doesn’t offer VA loans at all, and FHAs are harder to come by. This makes Capital One less attractive for a number of borrowers. Wells Fargo also offers a streamlined refinance option which helps alleviate some of the cost and time associated with refinancing.

    Capital One vs. Chase Bank Chase bank is a high-touch institution to work with. You must speak with a mortgage banker directly to get complete info on products and requirements. There is limited information online for borrowers to access. This can be a turnoff for people who prefer to do the bulk of their research independently. A refinance can add up with Chase bank, too. The bank current charges rate lock, origination and underwriting fees. It might make sense to compare these two banks carefully to see which has more pros.

    Other considerations before refinancing

    What is your break-even point? There are many fees associated with a refinance, both from your lender and third-party companies who help in the process. Calculating the break-even point lets you see how long it will take you to pay off your refinance, even considering the lower monthly payments you’ve secured. Here is the equation:

    The total cost of refinancing/ monthly savings from refinancing = how many months it will take to pay off your refinance.

    If the number of months it takes to pay off your refinance exceeds the amount of time you plan to be in your home or pay your loan off, refinancing may not be your best bet.

    Have you shopped around? The best way to determine what product or lender fits your needs best is through research and crunching the numbers. Use a mortgage calculator to estimate the cost of your refinance. How do the numbers look compared to your current offer? How do they measure up from lender to lender?

    Choosing a mortgage can be a complicated task. To simplify the process, Capital One employs a number of professionals who can help clients review all available options and then choose the mortgage which makes the most sense for them. These professionals can help potential home buyers find out how much home they can afford and can even pre-qualify them for a home loan before they begin looking. Being armed with this type of information means the individual knows the general price guidelines they must look for.

    Final thoughts on Capital One refinancing

    Capital One’s website has an option for customer service, no matter what time you log on, offers rate quotes at no cost, and allows customers to go through the pre-qualification and loan application process.

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