Refis on the Rise: Time to Take the Plunge?

housesIn the morass of glum housing news, there is one bright spot: Tantalizing low mortgage rates are continuing to entice more homeowners to refinance. The number of applications to refinance has tripled in the past year, says the Mortgage Bankers Assn.

Refinance applications soared 18% in the week ending Oct. 2 compared with the previous week, according to the Mortgage Bankers Assn. Rates on 30-year fixed rate conforming home loans dropped to 4.89% -- their lowest level in four months. (They hit a record low of 4.78% in the spring.) Some refinance rates are even better for borrowers with stronger credit, say experts."There are only a few times in history that rates have been this low," says Florida real estate economist Lewis Goodkin, who has studied the mortgage industry for more than three decades. "It's really one of the strongest arguments for refinancing."

Financial experts say there are several good reasons to consider refinancing. Lowering your monthly mortgage payments can free up cash for reducing your financial stress, such as repaying other debt and replenishing your retirement accounts.

For older Americans, shortening your mortgage term now could help leave you mortgage-free in retirement, reducing the income you'll need to generate from your 401(k), which was likely battered in the stock market this year.

The average rate on a 15-year fixed mortgage fell to 4.32% from 4.34% in the week ending Oct. 2 compared with the previous week. But experts say there are crucial factors to bear in mind before jumping into refinancing. And borrowers should expect to clear a number of hurdles that didn't exist the last time they applied for a loan.

Most single-family home loans today need to fall within Fannie Mae and Freddie Mac limits. (Loans backed by Fannie and Freddie make up a vast majority of the nation's mortgages.) In most places, that's loans up to $417,000. For jumbo loans that number rises to $729,750. Lower mortgage rates may have homeowners chomping at the bit to refinance, but the process of qualifying for a loan has never been harder.

Banks, still reeling from one the worst financial crises in decades, have installed stricter credit and income standards. That means convincing a lender that you can repay a loan is increasingly more difficult. Credit requirements are more stringent and borrowers with anything but impeccable credit will face higher fees.

Even if your financial house is in order, you can expect delays. Banks are overwhelmed by the rush of business and some lenders are taking up to 90 days or more to complete a refinancing. For homeowners who have HELOCS – a home equity line of credit where lenders agree to lend a maximum amount within an agreed period – waiting for the second lender to agree to the loan could add another few weeks to the process.

Crucial to any refinancing effort are credit scores and your home's current value. Each will determine if homeowners are eligible to refinance and how close they can get to the lowest rates available. Having some equity in your house is also key.

If your mortgage is less than 80% of the value of your home or less than 75% of your co-op or condominium, plenty of refinancing options exist. Determining what your home is worth is trickier now that home values are sinking in some parts of the country.

Some homeowners are finding that their homes have declined too much in value to qualify for refinancing. Folks in this group – estimated to be about 16 million households – will be forced to fork over an appraisal fee to find out if they have enough equity in their homes.

Appraisal fees vary widely, depending on where you live. They can start at about $350 but soar much higher in pricier areas.

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The amount of cash you can get depends on your age, the type of reverse mortgage you select, the appraised value of your home, current interest rates, and where you live. In general, the most cash goes to the oldest borrowers living in the homes of greatest value at a time when interest rates are low. On the other hand, the least cash generally goes to the youngest borrowers living in the homes of lowest value at a time when interest rates are high.

June 07 2013 at 7:23 AM Report abuse rate up rate down Reply

Do yourself a "HUGE FAVOR" and carefully read this:

The 21st Century Act: Final Amendments to Regulation CC Section:
"Prohibits" reimbursement of Credit, Loan, and Finance Balances to a "Bank Entity" leaving only "Nonbank Consumers" able to receive reimbursement, as specified on Pages 85 and 86.

The 21st Century Act states on pg. 85 and 86 that "Only Nonbank Consumers can suffer losses and File for
Re-credit or Re-claim on any Accounts under the Federal Reserve System" also “Any Second or Third Party Presenters utilizing a Banks Documentation, Contracts and/or Agreements to seek Claims shall be considered to be that Bank under the Rules and Regulations”, the Expanded Definitions also includes Credit Cards and Home Equity Lines of Credit.
Also on Pages 100 and 101 "In any Financial Claims the Indemifying Bank (Parent Bank) must be Identified".

(Left-Click to Search Link)
21st Century Act: Final Amendments to Regulation CC

This Federal Law signed January 1, 2006 makes it "Fraudulent" and therefore "Illegal" for the 3 Major Personal Credit Reporting Agencies: Equifax, Experian, and TrasUnion to allow the Banks and the Banks "Third Party Presenters" to place any claim of "Negative" or "Potentially Negative" Accounts on your Personal Credit Based upon the fact that they have no "Legal Grounds or Claim" to the Money.

This is an "Unfair Practice" that diminishes our Financial ability to support ourselves and adversely affects our ability to gain work in many areas which breaks "Antitrust Laws".

These Rules also back claims of: "Aiding and Abetting" Racketeering and Extortion (of Finance Accounts and Personal Credit Reports), Pandering (of Credit and Loan Accounts, and Conspiracy to wit), Theft, Fraud, Federal Mail Fraud, and Telephone Harassment. Also "Threatening of the U.S. Financial Infrastructure", which is a "Capital Crime".

In order to engage the Federal Trade Commission to act against this injustice we must File many Claims, as these Reports must be Filed by a large number of people in order for the Federal Trade Commission to pursue
"Legal Action".

(Left -Click to engage Email Address)

This is way easier than "Occupying Wall Street"!

March 11 2012 at 6:29 PM Report abuse rate up rate down Reply