After all the bad news that has been coming out recently about the real estate market generally and the mortgage industry, specifically, I am here to finally report some good news. Unbeknownst to most homeowners, interest rates on conforming/non-jumbo loans (i.e. loan amounts of $625,000.00 or less) have now fallen enough that we are firmly entrenched in a refinance market.
Interest rates on these loans are now available in the low 4s on 30 year fixed rate loans and the low 3s on 15 year fixed rate loans. Due to the tightening in the lending markets, banks are requiring that borrowers have good credit (with scores at least in the mid 600s) and equity of 10% or more in their homes. In addition, borrowers will need to be able to verify their income and employment to qualify for these rates. However, there is a government program know as HARP (Homeowners Affordability Refinance Program) that allows for refinances even when houses have negative equity!
For anybody who purchased a home recently and has a 30 year fixed rate interest rate of 4.75% or more, it will be worth exploring the possibility of refinancing. If the monthly savings on the new loan, due to the lower rate, are enough to repay the closing costs within 2 years, it is worth refinancing.
Also, for someone who has an adjustable rate mortgage (i.e. an ARM) that will be resetting in the next year or two, this is the time to replace it with a fixed rate loan. Since most of those ARMs have interest rates in the upper 2s or low 3s, the fixed rates are now low enough to replace them without incurring a significant increase in payment.
Finally, there are many people who have large balances on their home equity lines of credit at interest rates that are tied to Prime. As a result, it is worth considering refinancing to consolidate these lines of credit with a first mortgage to lower the rate and payment.
All loans arranged through FCMC Mortgage Corp. a NY/NJ Registered/Licensed Mortgage Broker with State Banking Departments and made by Third Party Lenders. NMLS Number 6654.