Mortgage Refinance Rates
Refinancing your existing mortgages has many advantages like lowering the monthly payments or interest rates paid. The latter is in fact one of the most important reasons for opting for refinance. Thus a vital point to be considered while taking a mortgage refinance is mortgage refinance rates.
Mortgage refinance rates depend upon various market factors as well as your personal factors as a borrower. But mortgage refinance rates mainly depend upon the interest accrued on the refinance loan. The mortgage refinance rate is expressed as the Annual Percentage Rate (APR). APR is the total amount of money repayable by the borrower to the lender on a loan, per annum.
It will also depend on the kind of mortgage refinance loan you would choose. The different kind of mortgage refinance options available can be broadly classified on the basis of:
-Fixed mortgage refinance rate: Various fixed rate refinance include 30 year fixed mortgage refinance, 20 year fixed mortgage refinance, 15 year fixed mortgage and 10 year mortgage refinance, etc.
-Adjustable mortgage refinance rate: This category includes 1 year ARM (Adjustable Rate Mortgage), 3/1 ARM refinance, 3/1 interest only ARM refinance, 5/1 ARM refinance, 5/1 ARM interest only refinance, etc.
Few ways by which you can reduce your mortgage refinance rates are: -Keep a check on your credit score: Your credit history will have a great impact on the mortgage refinance rate you will be offered. Making payments late or missing payments will decrease your credit score. Also, take care to see that you don’t use your credit cards and line of credit loans to the maximum credit limit available to you. Doing so will again decrease your credit score. Having a bad credit score will not stop you from availing a mortgage refinance. But the mortgage refinance rate offered to you will be 2% to 6% higher than usual. So try to improve your credit score to get lower mortgage refinance rates.
-Think about paying points: This is one more alternative to lower mortgage refinance rates. One point is equal to one percent of the mortgage amount. For instance, a mortgage loan of $10,000 with 3 points will incur additional $3000 as charges. Higher the points charged to the mortgage, lower will be your mortgage refinance rate. Points can either be paid upfront or financed by the amount from the loan.
-Do your research: As in all other sectors, there is intense competition in the lending sector too. It might make sense to obtain mortgage refinance from your current lender, but they might not necessarily offer you the best mortgage refinance rates. Thus it is wise to compare rates offered by various lenders. And with World Wide Web at your finger tips this should not be a tedious task. Applying online will help you get multiple offers from various lenders. Compare the mortgage refinance rates as well as the services of the lender and then choose the best offer suiting your needs.
To get the best mortgage refinance deal don’t compare only mortgage refinance rates but also consider closing costs and redemption penalties.
Watch the video related to refinance offers
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Help answer the question about refinance offers
Who is offering the best rate for a home refinance?We have a rental property that we would like to refinance and consolidate all our credit.
About Author
Martin Lukac represents RateEmpire.com Mortgage and Refinance Loan marketplace. RateEmpire.com is a destination site of personal finance, investing and taxes. For more information please visit Mortgage Refinance Rates
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May 30th, 2009 at 12:11 am
I would go to a reputable, bricks and mortar (physical location) of a known bank to refi. Part of the mortgage debacle was using anyone and everyone (including the big banks, though) and it is critical to be sure you know who you are dealing with and what you are dealing with! Get a referral and go with someone with a good track record. Also, start with the bank you deal with. They want to keep your business and may not charge closing costs like another lender would. The credit score will determine the "good rate" that sounds low but still depends on credit score.
May 30th, 2009 at 1:50 am
It's not just the rates you want to compare, look at the total loan package.
I just had a client go to an internet lender for a quote and the GFE was $5,000 more than the local lender, and if the refinanced in less than 5 years, there was a big penalty.
May 30th, 2009 at 10:12 pm
May 31st, 2009 at 6:00 am
The answer is right now, it is anyone's guess as to what is happening with the market, because the entire market is collapsing at the same time. I work for a very large conventional mortgage lender, and the ususal indicators that would point to rising/lowering rates are conflicting at this time.
That being said, here is what is going on, or things you can follow that may help better answer your question:
1. The dollar is weak – normally would mean rates increase, as this would help attract foreign currency, and push the value of the dollar back up, and thus lower rates in the long-run.
2. Mortgage rates follow the 10-yr treasury index – long term mortgage rates typically follow the 10-yr treasury, and this is the best indicator of rate behavior from one day to the next. Rates will run anywhere from 2-3.5 points higher on average depending on other factors.
3. Fed cuts do not equal mrotage rate cuts. This is the oldest myth in the books, but Fed ACTIVITY and DECISIONS can impact mortgag rates. Example, the last 3 fed cuts in 2007 pushed mortgage rates UP.
4. Good news for the stock market is generally bad news for rates, as people take money out of bonds/treasuries, and dump it back into stocks, thus increasing yields.
5. Recessions are typically good for rates, as people invest mroe in bonds/treasuries during these times, pushing yields down.
6. Liquidity – or what people call demand – will affect rates. If there is no demand for mortgages on the secondary market (as there is right now) then rates go up, and vice versa.
7. PMI companies – yes, these people have a big impact on mortgage programs and rates. You will not be able to finance 100% of a home anymore, at least not conventionally for some time, as the PMI companies will not insure them anymore. Also, two of the largest PMI companies in the US are not expected to make the end of the year, so expect rates – based on this alone – to increase, unless something else happens.
8. Bear Stearns, and other such companies, that go under affect liquidity, and thus rates, and program availability, etc.
As you can see, these are only some of the issues that affect rates. Right now the trend is upward, and it is anyone's best guess as to when it will stop. According to Greenspan's book, he sees rates going back into the double digits sometime in the coming years like back in the 80's.
Also, a mortgage program that was available yesterday, may not be availabe in a week, or even tomorrow, and there is no control over this. We live in a free market, and therefore, these changes happen all the time.
Also, the agencies (Fannie Mae and Freddie Mac) that govern conventional mortgages are implementing pricing adjustments that will affect everyone with scores less than a 710 pretty soon, so rates will be much higher for people with lower scores.
Lastly, mortgage markets are forward-looking, and if the investors feel the news is bad, which it is right now, expect rates to reflect that. Inflation is increasing, and so will rates.
I know that this may not directly answer your question, but I hope it helps.
May 31st, 2009 at 9:22 am
Try to hold out for 4.5% fixed for a 15 year loan. There is always the possibility of a 3.5% rate if the economy does not recover by summer..
June 1st, 2009 at 1:27 am
The Fed Funds Futures are pricing in another 1/2 point rate cut by December. It could happen by the end of November.
I don't know for sure if this will happen, but that is the current prediction.
The problem is the lower rate will help all this massive US debt and home owners but will drive up inflation. I have been arguing for about a year that we run the risk of "Stagflation," (inflation with a recession).
June 1st, 2009 at 10:33 am
June 2nd, 2009 at 5:43 am
It is hard to say the rates have risen siginficantly lately, if they follow the same trend as last year the rates will go down in the beginning fall. This is exactly what happened last year the rates went up at the beginning of the summer. You may want to look at getting a good deal now and not refinance later on. If you are going to be in the house for over 5 years then you may want to look at buying the rate down it may be cheaper then actually refinancing in a year for .25% where you will not save any money because of the cost to refinance.