Is this a Good Time to Refinance Your Mortgage ?
Now that the interest rates are dropping , people are wondering if this is a good time to refinance their home.
Lets first talk about FHA and VA loans. If you are lucky enough to have a mortgage with one of those two institutions, there is some very good news. It is a fantastic opportunity to refinance your home regardless of your equity position. Alot of people would like to take advantage of the lower interest rates but they can’t simply because they don’t have equity, which means that the property won’t appraise in excess or equal to the outstanding debt.
With the FHA and VA streamlined program, the value of your property is not an issue, neither is your credit and neither is your ability to qualify for a loan. With the recent down turn in the economy, many home owners have been faced with job losses or subject to other changes in their financial situation. However with a FHA or VA loan, as long as you have been paying your monthly mortgage payment for the last 12 consecutive months you will qualify regardless of your employment status.
Many people are in FHA or VA loans with interest rates at 6.% and above, and we are now seeing interest rates at a 30year fixed mortgage trending down to 5% and possible lower. So with a full point spread between your current interest rates and that of which you could achieve with a refinance, it’s well worth your while to refinance your mortgage today.
If you don’t have an FHA or VA loan , it is still a good time to refinance, however many people are challenged because of their equity position or their ability to qualify. However if you are looking to refinance , keep your eye on the market and contact your mortgage broker . The idea is that you want to get your application in and processed and ready to go in case you see an opportunity in the market , such as a dip in the interest rates, so you can lock in your loan and refinance. You will be happy that you did.
We are starting to see interest rates fall below 5% which is pretty extra-ordinary. If you are a FHA or VA borrower and you have for example a 6.5 % interest rate on a 350.000 $ loan , you could refinance your property for about $3500.00 -$5000.00 at most in terms of loans costs and see a payback for your self within 6 - 12 months ,which is a fantastic bargain.
If you don’t have a FHA or VA loan, and have great credit, could you still qualify for refinancing?
It depends on many factors, however, nowadays your qualification is not so much based on whether you have good credit or not ,as it is based on your ability to pay off that loan. Things have moved more towards the old school, where lenders will want to have a clear picture on your ability to pay off your mortgage. You may have to present tax returns, income slips , whether your are self employed or not, are all factors that will determine your ability to qualify.
Gone are the days when you could simply present a perfect credit score and pass qualification.
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