Lower Rates Make Now A Sensible Time To Refinance
Author: Rob Blake
Mortgage rates fluctuate in coordination with New York's Federal Reserve Bank fund rates. The yield on ten year bonds will determine when rates go up and down. Since this means that rates will likely rise in the near future, there may be no better time than now to consider refinancing.
The key factors in deciding if you should refinance at these record low rates involve how long you plan on staying at your residence and how much you currently owe on your mortgage. While it may be beneficial to most people to refinance their mortgage as soon as possible, some may run into a problem where they just plain won't qualify.
Equity is a key factor in refinancing. Even if you are not looking to get any cash out of the refinance, the equity still needs to be there even if you only plan on paying off your existing mortgage. This could become a problem if the company you are looking to refinance with is going to add in closing costs and points to your mortgage. While some lenders will cover these costs, others will include these fees in your refinance, which will mean you will end up with a bigger balance on your mortgage, which in turn will effect your equity.
Much depends on where you live and the trends in the real estate market in your area. Some areas may have experienced an increase in property values, while others may have had a decrease in value. This means your equity in your home may have improved, thus meaning you may be in a better position to refinance. In a situation where the property values have decreased, you may no longer have enough equity to refinance. For example, say you have a $200,000 mortgage on a home that was worth $220,000 a year ago. You apply to refinance but the new appraisal indicates the value of homes in your area are now only $210,000. Since your equity is now well over 90 percent, the chances of being able to refinance will not be good.
There are also other factors that may mean that refinancing at this time won't be as beneficial to you as someone else. If you plan on selling your home in the near future, or if it is currently on the market, it will not be beneficial to you to start a new loan by refinancing. When selling your home you want to keep your mortgage balance as low as possible so you can make as much as you can from the sale of the property. Refinancing could lead to additional fees which will drive up your balance, resulting in less profit from the sale of the home.
While certain factors may mean you won't qualify to refinance, or even want to refinance because of your situation regarding the property you own, the low interest rates being offered now make this an excellent option to consider. How long you plan on staying in the home and the balance owed on your present loan are a couple of factors that may mean that even with the lowest rates in history, refinancing may not be right for you.About the Author:
Rob K. Blake, mortgage expert and author, educates mortgage shoppers on finding local providers by state like
Virginia Mortgage Brokers and Lenders and provides reviews of national companies like
Accredited Home Lenders.
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