Mortgage refinancing: Is now the time?

By: Allison Millar, Contributing Writer
In: In the news
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You’ve probably heard that mortgage rates are at historic lows. Is this your cue to jump in and do a mortgage refinancing?

Mortgage refinancing 101

When debating a mortgage refinancing, think about:

  • Your timeline. Some mortgage programs are better for short term owners versus those who plan to live in their home forever. Factor in the market time for houses in the neighborhood when targeting a timeline.
  • Your equity. BEcause some people are “underwater” in their mortgages, meaning they owe more than the house is worth, lenders are very cautious right now about offering certain mortgage programs. They want high credit scores, low debt to income ratios and a track record of repaying loans on time.
  • Your credit. Lenders are scrutinizing loans more closely, so make sure you have a solid history and can explain any blemishes on your report.
  • Total loan amount. Be careful of the old tactic of refinancing and then adding to the total with a few credit bills. Here’s a good primer on evaluating debt from MSN Money.
  • Rates. If today’s rate is two percent lower than what you have, go for it, says Financial Web. You just need to pay attention to the refinancing costs and decide how long you plan to keep the house and whether bundling other debt into the mortgage makes sense.

Mortgage refinancing overview

If you decide to do a new mortgage program, here’s a rundown on the options from Quickenloans.com. You might find that an adjustable rate works well because you plan to move within three to five years. Or, as a member of the military, you might qualify for the VA loan.

Mortgage refinancing and special mortgage programs have their place in the market, but they are not the answer for everyone. Look at your situation closely to see if mortgage refinancing is the right move.

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  1. One Response to “Mortgage refinancing: Is now the time?”

  2. jamie
    Nov 10, 2010

    I think that mortgages are still hard to get in most areas of the country, which kind of makes these low rates moot.

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