Refinance Sunday – March 22nd – Time to Refinance Now!
Posted on | March 22, 2009 | 4 Comments
I am starting the column Refinance Sunday this week. It is going to be a column written each Sunday to assist and provide information about refinancing in the current housing market. Ultimately you will make the final decision but I will help to give you an objective prespective on the psychology of refinancing your home.
As many of you know, mortgage rates are at their lowest levels since Freddie Mac started collecting weekly data in 1971. There is little doubt that now is a great time to refinance. The only problems that homeowners may come across is a bad credit score or the value of their home has greatly declined in the last two years.
Buying on credit has become a sickness in America and it may hinder your refinancing process. If your credit score is below 720, you are not going to get the advertised mortgage rates under 5%. Mortgage lenders know what happens when they take on risky borrowers. The subprime mortgage crisis is fresh in their minds and they do not want to take on those challenges again. With the swarm of mortgage refinance applications being submitted lenders can pick and choose who they want to refinance. Mortgage lenders won’t be overall picky with who gets to refinance as the government is providing incentives for them, but they will choose wisely this time around.
The value of homes in America has greatly dropped over the last two years. What many of you may not realize is that the value of your home may be worth MUCH less than it was two years ago making it difficult to get through the appraisal process. If your home’s value has greatly dropped, the amount you have put into it is no longer as impressive as it was two years ago. You may actually owe more than the house is worth even after paying on a mortgage for several years. Obviously there is nothing you can do about this, but be aware of this issue before you fill out your mortgage application.
If you have no concerns with either of these issues, I would strongly suggest you attempt to refinance now. If you wait for mortgage rates to fall even more, there is a chance that the value of your home will continue to decline. There is also a chance that mortgage lenders will not have the capital to refinance your current mortgage if you are not in the first wave of applications. There are many websites that you can check to get some quotes with one of the best being amerisave.com. To see where home values and inventory are headed in your area, make sure to check out Housing Tracker. I check this site every week to make myself aware of overall trends in the different housing markets.
Something else that is very important in your market is the unemployment level. If there are predictions that the unemployment rate is going to continue to increase in your market, the value of your home will continue to decline. If people are losing jobs and do not have money, there is no reason for outsiders to move into your market to buy up the homes for sale and the new homes that have been built. A great site to check this and historical unemployment information is the Bureau of Labor Statistics.
Make sure to check back each Sunday as I will write my weekly column on refinancing and the road ahead. Bookmark the page below to make it easier to access the information.
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4 Responses to “Refinance Sunday – March 22nd – Time to Refinance Now!”
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March 25th, 2009 @ 6:24 am
So, if I bought my house a couple of years ago and I owe more than the house is worth, should I get an appraisal and try to refinance. Or is this not a good situation to try to refinance in? I’m very confused about the fact that if my house is worth less, the amount of money that I put into it isn’t as impressive.
March 25th, 2009 @ 2:17 pm
The fact that you owe more than your house is worth is going to kill your chance at a low refinance rate. Having no equity in your home means your rate will, most likely, not drop at all by refinancing.
March 30th, 2009 @ 1:38 pm
Well if you have an FHA loan, you can streamline without an appraisal. The streamline also does not require a credit check (I think), the down side to this is you have to pay the FHA upfront fee which is 1.5% of the total loan value. You may get a partial credit but just realize its going to be a bit of cash. Started the process last week and its about $5-6k worth of costs. If you haven’t paid down your loan by that amount, you will have to pay the difference out of pocket.
June 5th, 2009 @ 7:22 pm
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