Lower Mortgage Rates Open Refinance Opportunities

[Sep 11, 2009.]

 

Homeowners who've been waiting for the best mortgage rates may want to refinance now. Average rates for a 30 year fixed rate (FRM) mortgage are close to 5 percent according to the LA Times. This figure does not include an estimated .7 percent typically charged as "points" for a 30 year FRM. Nonetheless, low refinance rates can offset closing costs and make refinancing more accessible. Although lowering your mortgage rate and monthly payment may be your primary concern, refinancing can also provide additional cash for expenses such as home improvement and debt consolidation. Unfortunately, unsecured debt consolidation loans, which are riskier for lenders, are more difficult to come by as the credit crunch continues.

Compare Refinance Options Using Mortgage Calculators

An easy, no-pressure way to find mortgage refinance options is using mortgage calculators. You can estimate how much you can afford to borrow, compare refinance terms to your existing mortgage loan terms, and compare refinancing options. Go here for more information on refinancing.

Credit Climate, Home Equity, and Your Refinance Plans

A few years ago, homeowners had easy access to refinancing as many homes had considerably increased in value and homeowners had plenty of home equity.  As home values have declined, homeowners have found it more challenging to find the refinancing they need. Here are XXX things to consider if you're seeking a cash out refinance.

• Calculating home equity: Estimate your home equity by subtracting the balance of mortgage loans against your home from your home's current value. You can find home value calculators online, or contact a local real estate firm for an estimate of home value. Most lenders will not lend more than 80% of a home's value including cash out. If your home is worth $300,000, and you owe 220,000, you may qualify to refinance for approximately $240,000, which would leave about $20,000 in extra cash. (This estimate is for illustrative purposes, and doesn't consider refinancing costs.)


• The impact of closing costs: If you're refinancing to consolidate $5000 worth of credit card debt, it may not be worthwhile if you pay $5000 in closing costs, but if you owe $20,0000 in consumer debt with high interest rates, paying closing costs to consolidate debt through refinancing can help you streamline and even lower payments.


• The value of home improvements: Refinancing to refurbish your home or add on to it can be a good investment; you'll want to verify that the project you're planning can add value to your home. Talk with real estate professionals, and contractors to do the math. Also consider how long you plan to keep your home; if you'll be selling soon, make sure the home improvements will add to the appeal of your home for most potential buyers.

Talk with your accountant or financial advisor to sort out the particulars of your refinancing needs, then shop mortgage quotes to find your best mortgage rates and refinance terms.

 

About Author:

Karen Lawson is a freelance writer with extensive experience in mortgage banking and home loan loss mitigation programs. She holds BA and MA degrees in English from the University of Nevada, Reno.