Mortgage Refinancing With Current Rates
View PDF | Print View
by: marciafreeman
Total views: 86
Word Count: 473
The Federal Reserve announced this week that they were cutting interest rates offered to banks to almost zero. The hope is that low rates in the current struggling economic times will encourage both lenders and borrowers. As a result of the rate cuts, the rates for mortgage loans dropped to rates not seen since the early 1970s. Just over 5.1 percent was where the average fixed rate 30 year mortgage hovered. It was the seventh continuous week that interest rates dropped. Many consumers have decided to take the opportunity to undergo mortgage refinancing with the low rates. But banks are not lending as easily as they were a year ago. Their lending practices have become much stricter, as a result of the upheaval in the credit market this past year. That means that not as many applicants for mortgage refinancing are being approved.
Rates are at record lows, but lenders are now more risk averse. Banks are requiring higher credit scores and scrutinizing credit histories more than ever before. To secure mortgage refinancing, a consumer must have a higher credit score than was required for a loan for the same amount just a year ago. There has also been a drop in home values in many places across the country. That means that those homeowners now have less equity in their homes. An updated appraisal of the property is usually necessary for any mortgage refinancing. When those appraisals are done, some consumers are told that their properties are worth less than their mortgages now. Obtaining approval for mortgage refinancing will be challenging for those homeowners. There are plenty of homeowners who will meet the new lending standards and qualify for mortgage refinancing. If you are considering refinancing, analyze your budget and financial plan to figure out if now is the time to do it. First, add up all the fees and costs of refinancing. You will need to add up things like an appraisal, title fees, documentation preparation and lawyer fees. Determine if you will have to pay a fee if you pay your current mortgage early and add that in to the refinancing total. Next, work out how much you would save each month on your mortgage payment under the new interest rates. Thirdly, calculate how many months it will take to actually start saving (know as your "break even" date), by taking the cost of the refinancing and dividing it by your monthly savings. Last, determine how long you anticipate owning the house. Mortgage refinancing may not be the best choice, if you plan to sell the house before you reach that break even date. Similar Articles Home equity loan ... Home equity loan ... Mortgage rates ... Home equity loans ... Mortgage rates ...
About the Author
Get more related to refinance, read Getsmart.com.
Rating: Not yet rated