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Low Rate Refinance Could Save You Money

Posted on | March 26, 2009 | 1 Comment

fico_scoresWith Freddie Mac reporting that mortgage rates currently average 4.85% across America, it makes sense that now is the time to refinance.  By refinancing in the current mortgage environment, you could save over $30,000 on a $249,000 mortgage and have it paid off five years earlier than predicted.  You will need to make sure that you crunch the numbers and do your research to find out the best options for you, but getting a low mortgage rate refinance right now should be something you consider.

If your current mortgage rate is over 5.75%, refinancing today will greatly benefit you.  I do have a word of caution for some of you who have homes in “bubble” markets.  If you do not have 20% equity in your home, it is very unlikely that mortgage lenders will give you a rate even close to those being advertised.  Unfortunately, most lenders still have the subprime mortgage crisis fresh in their memories and they are not willing to lend money to anyone who would be considered a risky borrower.  Their whole business model may faulter if they go out on a limb and do this.

You will be able to get a refinance if you do have less than 20% equity in your home, but it might not be a wise decision if your mortgage rate is already manageable.  There are many sites that offer mortgage calculators that will assist you in making the best financial decision for your situation.  The best mortgage calculator on the internet is available here.  For those of you who are “numbers” people, you can crunch the numbers all day on these calculators.  Ultimately, you will not know how much you will save until you apply for a refi.

When you decide to refinance, it is advisable to make sure you have a credit score from at least three credit agencies.  Experian.com charges a reasonable rate to access your credit score from three different, reputable agencies.  I would suggest you check your score at least once a year if not more.  You may not realize some of the credit companies that show up on a credit report in an economy like this.  I have several friends that have found collection agencies reporting unpaid dues to their credit report.  If you have not accessed your credit report in the last year, this may very well have happened to you and you do not know it.

After you have a credit score in hand, you will know what kind of financial leverage you have.  Once again, you need to make sure you have 20% or more equity in your home.  If you have not had your house appraised in the last month, you need to get it done now.  It is highly possible that the value of your home has decreased.  Even in areas that were thought to be recession proof have seen 20% to 30% declines in home values from the peak.

If you have the opportunity to refinance under 5% with a no appraisal refinance, go for it!  I cannot urge you enough to jump on this opportunity.  The biggest issue that borrowers are having with the current refinance process is getting through the appraisal step.  If you can skip that step, consider it a gift.  For any of you who have gotten a refinance with no appraisal, please comment on this article and let us know how you got this opportunity and how it went.

Category: Refinance

Comments

One Response to “Low Rate Refinance Could Save You Money”

  1. » Subprime Blogger / Low Rate Refinance Could Save You Money » Subprime Mortgage Refinance
    March 26th, 2009 @ 9:05 pm

    [...] news by admin « subprime mortgage lenders: Fannie Mae and Freddie Mac have [...]

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