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Is Home Mortgage Refinancing Really Worth It?
from: Steve ShannonIs it really worth it? Excellent question... since the refinancing process can take upwards of 2-3 months to complete, plus the expenses and hassles of refinancing may outweigh the benefits.
Not everyone should refinance just because rates are lower. The general rule of thumb is to consider refinancing if rates are at least 2% lower than your current rate. This is considered a safe margin.
Also, consider these things...
Are you planning to sell the house at any time? If so, how far into the future? It may not be beneficial to refinance now. Many people who are "in the know" say that it takes 3 years to fully realize the savings from refinancing; considering in all of the costs of refinancing.
Will you have to pay a penalty for closing the current loan? This may be substantial enough to change your mind about refinancing.
Do you have an Adjustable Rate Mortgage? You may want to lock your loan in at the lower rate if you are fairly sure the rates will rarely, if ever, get this low again.
Do you want "Cash Out" to pay other debts, etc.? Keep in mind that if you ask for "cash out refinancing" that the amount of your loan is usually limited to 80% of your home's value. Of course, all things being different, you should check with your lender to see what exceptions may apply. If you need cash, but the straight refinancing option isn't equitable, you might want to consider getting a Home Equity Line Of Credit. This lets you borrow against the equity in your home with a credit account, checking account and/or direct payment.
Is your loan owned by Fannie Mae or Freddie Mac and if so, do you have at least 5% equity in your home? The higher the Loan-To-Value (LTV) number the better for you. Most lenders expect you to have at least 10% equity in your home to qualify. 10% equity in your home gives you have a Loan-To-Value (LTV) of 90%. However, if your loan is owned by Fannie Mae or Freddie Mac, your LTV could be 95% - meaning you only need to have 5% equity in your home to qualify. Contact the company where your mortgage payments are sent and ask them about your LTV.
Because each situation is unique, there are several more things to consider. Spend a little bit of serious time researching this topic until you are satisfied with the quality of answers you have found in regard to your own situation.
The wrong decision could... well, hurt. The right decision could end up saving you quite a nice little nest egg.
About the Author
To learn many more beneficial tips about the home mortgage
refinancing process, including the various fees to expect, visit: http://www.privilegedinfo.com/refinancewisdom.html .
Steve Shannon is webmaster at PrivilegedInfo.com.
Refinance Home Mortgage Loan Rate News
Non-Agency Mortgage Bonds Rallied as Rates Declined (Update2) (Bloomberg)
Jan. 5 (Bloomberg) -- U.S. mortgage bonds without government support rose last month, as efforts by the Federal Reserve and Treasury Department to lower home-loan rates boosted investor demand.
Read more...Non-Agency Mortgage Bonds Rallied as Rates Declined (Update1) (Bloomberg)
Jan. 5 (Bloomberg) -- U.S. mortgage bonds without government support rose last month, as lower home-loan rates boosted investor demand. Securities initially rated AAA and backed by prime- jumbo mortgages with five years of fixed rates climbed 5 cents on the dollar in December to 75 cents, according to JPMorgan Chase & Co. data.
Read more...Mortgage Rates At 37- Year Low (WHIZ News Zanesville)
Mortgage rates have hit a 37 year low, which could mean good news for those looking to buy a home or refinance. Mortgage rates have been falling for nine straight weeks, putting 30 year fixed rates at 5.10%. So is now the best time to refinance?
Read more...Now May Be Good Time To Refinance Home (KMBC-TV Kansas City)
There aren't many bright spots in this economic recession, but one might be the fact that mortgage rates are at near record lows.
Read more...Jumbo mortgage loan rates put damper on refinancing (Boston Globe)
While plunging mortgage rates have spawned a frenzy of refinancing, borrowers with larger, so-called jumbo loans are still seeing interest rates in the 7 percent range, prompting many to abandon refinancing plans altogether or resort to creative transactions.
Read more...Don't miss the refinance window (The Capital)
CHICAGO - Lured by low mortgage rates, many homeowners have been rushing to refinance. Interest is gaining for good reason: Eligible borrowers can lock in rates that haven't been this attractive in decades.
Read more...Home Refinancing Is Up In The Triangle (NBC 17 Raleigh)
The weak economy has driven interest rates to record low levels, which has caught the eye of some homeowners looking to refinance. Here in the Triangle, refi’s are up because there's still plenty of money out there to lend; but there's a catch. Mortgage officers say the criteria is tighter and lenders aren't offering specialty products like no income loans anymore. In other words, they're ...
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