Reasons to Refinance Now

How many homeowners have you worked with in the past who seemed overwhelmed by the entire process? If you’re like most mortgage brokers or real estate agents, then you know quite a few. There are seemingly countless people who have bought homes who wish, several years later, that they had worked a bit harder or perhaps waited a bit longer to get the better mortgage rate or terms or points.Or perhaps there are those homeowners whose credit wasn’t quite where they would have liked it to be at the time of their application and were left with a rate that now seems unfair to them. They signed to paperwork, they’re locked in, but refinancing is always an option and right now could be the best time to encourage these homeowners to refinance to a better mortgage.Interest rates continue to remain at historic lowsOne of the major indicators that right now is the best time to refinance is that interests rates are at their lowest levels in history. There are individuals who are securing thirty-year mortgages for under five percent. If a homeowner can move from paying just over seven percent to around five, that would equal tens of thousands of dollars by the end of the mortgage term.At this point in time, no one really knows what the federal government will do with the interest rates in the coming year. Many ‘experts’ predicted that the rates would have increased by now and still the Fed is holding them at near zero percent for lenders. There are millions of homeowners who would benefit from refinancing their mortgages now thanks to these low interest rates.Credit score has improvedAnother major reason that now is a good time for homeowners to consider refinancing their mortgage is that their credit score will have likely increased since they purchased their home. This certainly isn’t for all homeowners, but those who may have missed payments, been slow with payments, or made other mistakes when trying to build their credit history prior to purchasing their home.A lower credit score will certainly affect the mortgage rate they receive and if they have managed to boost their credit score by twenty, thirty, fifty, or even one hundred points since they took out their mortgage, then now, with the low interest rates, is the perfect time to refinance their loan.Banks are hungry for positive businessPeople aren’t buying homes at the moment. There are a number of reasons for this, but with the housing crisis of the past few years, that has left many homes foreclosed. Banks are sitting on empty lots and dealing with increased competition for customers. That usually means that since demand is low, rates will be lower.A homeowner who is looking for a better mortgage rate will likely be able to find it with another financial institution, especially if they have already proven that, through this economic crisis and housing mess, they have been paying their mortgage on time every month. The business end of the industry is sitting in their favor.Many people are in a holding patternThere are many homeowners who are staying put with their homes and their mortgages. The value of their home may have dropped since they purchased, especially if they bought their home four or five years ago and they are merely waiting for the value to come back up. They may use this as a justifying reason why they aren’t willing to refinance right now, but it is precisely the reason that they should consider it.There has really never been a better time to refinance to a lower rate. If there’s room to make significant savings for the homeowner, then it may pay to encourage them to at least look into it.David