Refinancing Mortgages in Demand

Dramatic drop in mortgage rates has stirred interest in refinancing. According to Freddie Mac 30 year mortgages rates fell to an average 5.47 percent in the last week, as it was the lowest since March 2004.



Rates tumbled due to announcement from Federal Reserve that it was buying $600 million in mortgage-backed securities and debt to help the market. The sudden rate drop led to a 200 percent surge in mortgage refinancing applications.



The 30-year fixed-rate average was 5.47% with an average 0.7 point for the week ending Dec. 11, down from 5.53% a week ago. Last year the average was 6.11%.The 30-year average has not been lower since March 25, 2004, when it averaged 5.4%, Freddie Mac said.



For some rich equity refinances 4.875 percent interest rates are common. Treasury plans to slash mortgage rates on new loans as low as 4.5 percent to stimulate home sales.



How easy is it to refinance now?

You need at least 20% equity in your home, and with the most challenged market you may end up needing more than 20 percent.



When it comes to credit scores, a credit score of 720 is needed to get lower interest rates.



You must fully document your income and assets as well as your debt to income ratio need to be smaller now in a range of 43 percent or lower.



Should you wait for government to push rates lower?

A of today there are many homeowners who can already take advantage or lower rates. The more you wait, the quicker your property value may go down, squeezing your equity.



When and if government announced a new mortgage program, there will be many restrictions that homeowners need to qualify for.



Mortgage rates would have to fail in order to kick start the housing market and that is what Treasury department is thinking of to help housing market.



Many homeowners are doing very smart thing when they refinance. From paying bills to actually putting saving into retirement plans, savings account or anything that can be safe over a long period of time.



What is driving rates lower?

There few factors that have pushed mortgage rates lower. Stock market and gloomy economy outlook has triggered government to do something and with many actions taken by government it moved yields of 10 year treasuries.



Will rates jump back up? Yes they will rise from its lows and sometimes sooner than we may all think. If you are thinking of refinancing, now it is a time to do it.



Will government plans help boost the housing market?

In most cases what everyone can see the impact may not be as big as you might think. Lower rates can help homeowners from adjustable mortgages to fixed mortgages, but borrowers who desperately need to refinance may not qualify.



Higher lending standards prevent many to either purchase a home or refinance a home to get the most attractive interest rates.



What should I do?

Best approach is to get free mortgage quote and compare interest rate and monthly mortgage payment to see where you can save. Many websites offers such deals so therefore you have nothing to loose. Once you receive your quote you can simply decide if you are willing to wait for government to do something about mortgage rates.

1st And 2nd Mortgage Refinance Loan - Refinance And Lower Mortgage Payments

Refinancing both your first and second mortgage will lower your monthly mortgage payment and qualify you for overall lower rates. It will also save you money on closing costs and application fees. And while you are looking at rates and terms, you can reevaluate your loan's payment schedule to better fit your budget needs.



Why One Mortgage Is Better Than Two



Lending companies prefer financing one total mortgage rather than two separate loans.



So second mortgage rates are at least a point higher than first mortgage rates.



Refinancing your two mortgages into one will qualify your for a lower rate mortgage. Since lenders charge flat application fees, you will save money by going through the process only once. Closing costs can also be cheaper.



Readjusting Terms



In all likelihood, your mortgages have different terms. Refinancing is a good time to reevaluate those terms and decide what would best meet your budget concerns.



If lower payments are your concern, then choose a longer term. While this will increase your total interest costs, it will ease your immediate budget concerns. Then when your financial situation improves, you can make principal payments to offset the interest costs.



When concerned about interest costs, it's best to opt for a shorter term with its lower rate. You can also pay points to further lower your rates. But this is only wise if you plan to keep the loan for several years in order to recoup the costs.



Separate Is Sometimes Better



In some cases, it is better to keep two separate mortgages to save money. In some instances, refinancing your mortgages individually will get you better rates overall. This is especially true if your total mortgage principal equals more than 80% of your home's value.



If you plan to cash out part of your home's equity while refinancing, you may also want to finance a second mortgage separately. Cash out refi loans automatically boost your loan's rate.



In order to find your best option, request quotes for refinancing your mortgages together and separately. Also look at several different lenders to be sure you are getting the most competitive offer.