With mortgage rates at historic lows across the nation, many homeowners have been exploring their options to refinance. Last month, refinancing saw its highest activity since 2009. If you are thinking about refinancing, it is a good time to explore your options to see if you qualify as credit standards are still pretty strict. For those who do, the savings can be beneficial. You could apply saved money to aid in other expenses. A homeowner with a $200,000, 30-year, fixed-rate loan would save about $55 a month if he or she went from a 4 percent mortgage to a 3.5 percent mortgage. About 20 percent of refinances involved homeowners who had homes worth less than their mortgages.
If you’re not behind on your mortgage payments but have been unable to get traditional refinancing because the value of your home has declined, you may be eligible to refinance through the Home Affordable Refinance Program (HARP).
Some other advice on refinancing and if it would beneficial, you should consider:
- Look at the current interest you are paying. Experts say it is still worth it even if you can lower it half a point.
- How long do you plan on staying in your home? If its long-term, the savings will eventually pay off. The goal is to save money.
- Staying in the spirit of saving money, find out what the total fees involved with refinancing would be. Bank fees, appraisal fees, etc. You want to make sure you would make that money back in your long-term savings goal.
- Review your credit! Sometimes you can increase your score by cleaning up little blemishes on your report. The banks are strict and the points added may help. The credit unions aren’t always accurate. This should already be a regular practice for all of us! Having the knowledge of what’s on your report will also help during the application process.
- Do your homework and be patient. Rates are predicted to remain low well into 2013 so do your research thoroughly.
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