2009 has already handed consumers some good financial news, which is a welcome change in the current economy. As of the second week in January, the average interest rate on a 30 year fixed rate mortgage was at 4.89 percent. The drop in interest rates have encouraged many current homeowners to apply for mortgage refinancing. A survey released by the Mortgage Bankers Association shows that applications for mortgage refinancing were at a five year high. Those homeowners are hoping to take advantage of the lower rates before they go up again.
There have been so many applications for mortgage refinancing that some analysts in the housing sector say that it is causing a tiny boom in real estate. They claim the boom would be bigger, if it were not for decreases in home values and stricter lending standards. Value decreases have caused decreases in homeowner equity, and in some cases homeowners now own so little equity that they are not eligible for mortgage refinancing. Nearly half of the homes that were bought in the last 5 years in one county in California have dropped below what their owners bought them for. The higher credit scores and spotless credit records now required for mortgage refinancing mean that fewer consumers now meet the standards. A minimum of 700 is the credit score bar for many banks now.
Many financial analysts believe that interest rates will remain low the next few months, since the federal government agreed to purchase $500 billion of mortgage backed securities in the hopes that it would spur lower lending rates and encourage consumers to take on new mortgages. If you are interested in mortgage refinancing, now is a good time to shop around. Most financial advisers tell you that mortgage refinancing is a good decision if the rates are at least 1 percent below those of your original mortgage. It is, however, more important to look at your particular situation and determine if the cost and savings over the time you intend to own the mortgage makes sense. First, calculate what your monthly savings would be by comparing your current payment to the estimated payment under the new rate. Tally up the actual mortgage refinancing costs, such as an appraisal, lawyer and documentation fees and other closing costs. Divide your refinancing costs by your estimated monthly savings. This will give you your break even point, or how many months it will take before you actually start saving on your monthly payments. If your break even point is longer than the time you expect to own the property, then it may not make sense to undergo mortgage refinancing.
Similar pages Mortgage loans . Refinance rates . Mortgage rate . Refinance home loan . Mortgage loans .

View PDF | Print View
by: marciafreeman
Total views: 113
Word Count: 476