Tuesday, October 30, 2007

Is it Time to Refinance?

From Realty Times:

“We used to have a rule of thumb that one should refinance only when rates drop at least 2 percent from your current mortgage. With the tremendous volatility of the financial marketplace, this 2 percent rule of thumb does not always makes sense.

More importantly, there are many other reasons to refinance other than lower mortgage payments. As of January of this year, credit card companies increased their minimum monthly payment from 2 to 4 percent of the outstanding balance. Mortgage interest is deductible while credit card charges are not. If, for example, you currently owe $5000 on your charge card, consider increasing your refinance mortgage by that amount and pay off the credit card debt.”

From the Navato Advance:

“Refinance now. Lock in a low rate. Save yourself from crippling mortgage debt. Ever since the Federal Reserve cut the federal funds rate mid-September, mortgage companies have been encouraging homeowners to heed these calls. Meanwhile, consumer advocates are warning against debtors falling prey to predatory lending schemes, and financial and real-estate professionals caution that many people in trouble may not qualify for new fixed-rate loans.”

From The Sydney Morning Herald:

“As interest rates rise, some borrowers are seeking to fix their loans while others are looking to refinance, in hot pursuit of lower rates. Saving even half a per cent on your mortgage repayments may help you sleep easier at night. However, if your home loan is reasonably small, it may take some time before the savings of a lower interest rate actually make up for the cost of refinancing…

…Before you jump from one loan to another, make sure you understand just how much it will cost to refinance. Depending on the terms and conditions of your current home loan contract, this may be an expensive exercise.”

From The Austin-American Statesman:

“Subprime guidelines have been rolled back about three years… You're going to have to save up your money, document your income, maybe wait a little bit. Understand that it's going to be OK for someone to look at your bank statement. Depending on the loan amount, consider an FHA loan. That's not subprime, but their credit guidelines are relaxed. Of course, that is also a full-doc loan.”

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