Dramatic drop in mortgage rates has stirred interest
in refinancing. According to Freddie Mac 30 year mortgages rates
fell to an average 5.47 percent in the last week, as it was the
lowest since March 2004.
Rates tumbled due to announcement from Federal Reserve
that it was buying $600 million in mortgage-backed securities and
debt to help the market. The sudden rate drop led to a 200 percent
surge in mortgage refinancing applications.
The 30-year fixed-rate average was 5.47% with an
average 0.7 point for the week ending Dec. 11, down from 5.53% a
week ago. Last year the average was 6.11%.The 30-year average has
not been lower since March 25, 2004, when it averaged 5.4%, Freddie
For some rich equity refinances 4.875 percent interest
rates are common. Treasury plans to slash mortgage rates on
new loans as low as 4.5 percent to stimulate home sales.
How easy is it to refinance now?
You need at least 20% equity in your home, and
with the most challenged market you may end up needing more than 20
percent. When it comes to credit scores, a credit score of 720
is needed to get lower interest rates.
You must fully document your income and assets as well
as your debt to income ratio need to be smaller now in a range of 43
percent or lower.
Should you wait for government to push rates
lower? A of today there are many homeowners who can already take
advantage or lower rates. The more you wait, the quicker your
property value may go down, squeezing your equity.
When and if government announced a new mortgage
program, there will be many restrictions that homeowners need to
Mortgage rates would have to fail in
order to kick start the housing market and that is what Treasury
department is thinking of to help housing market.
Many homeowners are doing very smart thing when they
refinance. From paying bills to actually putting saving into
retirement plans, savings account or anything that can be safe over
a long period of time.
What is driving rates lower? There few factors
that have pushed mortgage rates lower. Stock market and gloomy
economy outlook has triggered government to do something and with
many actions taken by government it moved yields of 10 year
Will rates jump back up? Yes they will rise from its
lows and sometimes sooner than we may all think. If you are
thinking of refinancing, now it is a time to do it.
Will government plans help boost the housing
market? In most cases what everyone can see the impact may not be
as big as you might think. Lower rates can help homeowners from
adjustable mortgages to fixed mortgages, but borrowers who
desperately need to refinance may not qualify.
Higher lending standards prevent many to either
purchase a home or refinance a home to get the most attractive
What should I do? Best approach is to get free
mortgage quote and compare interest rate and monthly mortgage
payment to see where you can save. Many websites offers such deals
so therefore you have nothing to loose. Once you receive your quote
you can simply decide if you are willing to wait for government to
do something about mortgage