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A Rush to Debt Consolidation Through Refinancing

[Dec 12, 2008.]

 

It’s been overshadowed in the news lately but mortgage interest rates are very low.  You are seeing rates as low as 2003 and there has been a flood of loan applications.

According to the New York Times, mortgage refinance applications consisted 69% of all mortgage applications during the first week of December 2008.

Excellent rates were the main focus but the rumor mill also played a roll.  The news of government intervention on the mortgage backed securities, or the underlying bonds that support mortgage loans.  It is said that the government will purchase these bonds creating liquidity and driving rates down to the 4.5% level.

Low interest rates play just one roll in this wave of refinances as you can see the advantages of a lower payment or debt consolidation.  Even with the troubled real estate market you can find a silent majority of homeowners who actually have equity and can qualify with the tougher lending guidelines.

The response is positive to this point and if interest rates do slide to the 4.5% range you can expect many more people to take advantage of these low rates to combine their debt lowering their household expenses and in turn stimulating the economy.

There is still a minority of homeowners, about 15% or 12 million families, who can’t qualify for these new rates but those who can, should jump at the opportunity to stimulate their own economic pictures.

Those families that have large mortgage balances may find the opportunity to refinance pass them by because of the tightening of credit guidelines.  Conforming loan amounts for any given area will be strictly enforced in this most recent refinance boom so pay close attention to those loan amounts when attempting to qualify.

If you find you exceed these loan limits you may find it difficult to improve your current situation financially but it is possible.

http://www.nytimes.com/2008/12/04/business/04refi.html?_r=1&ref=yourmoney

 

About Author:

Brent Lane is a Mortgage Consultant in Roseville, California. He helps homeowners in California with their mortgage financing and writes on his BLOG at www.thelanegroup.blogspot.com

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