Mortgage interest rates are sitting at about the lowest they have ever been. The averaged 30-year fixed rate loan is hovering at about 4.97% and the average 15-year loan is sitting at just 4.25% as of the week of September 25th, 2009.
These banner rates will be available to consumers with good credit scores, have significant home equity, and know how to shop around for the best deal. If you meet this criterion, it’s an absolutely great time to refinance your loan. The Federal Reserve will likely be reducing its support of the housing market over the next several months and mortgage rates will likely begin to rise. Some estimate that the Federal Reserve’s support of the mortgage market may be gone as early as March.
Consumers that are upside down on their homes will also likely be able to take advantage of these record low interest rates. The federal government’s Making Home Affordable Program has a special provision for those that owe 125% of their home’s value on a loan to refinance. Banks are now also finally starting to get their act together on workout programs and consumers that are behind on their homes or owe more than their home is worth are getting some help from banks.
Some people sitting with adjustable rate mortgages which are extremely favorable right now may be tempted to avoid refinancing to a fixed rate, but with rates at 30 year lows, it’s about the best time to lock in a fixed rate in recent history. If you plan on staying in your home beyond when your mortgage interest rate resets, you should take advantage of these new low mortgage rates.
Others may avoid refinancing since it involves quite a bit of work. Refinancing today can put a significant amount of money in your back pocket over the long run. To get your paperwork ready, grab your old tax returns and your last 2 to 4 paystubs. Make sure that your credit report is clean and that you have a solid debt to income ratio.