Refinance Is Important When Mortgage Rates Are Low!!!

If you want to lower your monthly mortgage payments, get rid of private mortgage insurance (PMI), and get out of balloon payment programs, then you can opt for mortgage refinancing as the mortgage rates have been historically low since first quarter of 2010. To find out whether or not to refinance, read the sections below.

You should refinance mortgage loan when it helps to reduce your interest rates and monthly payments. You should refinance your mortgage loans now as the mortgage rates are historically low in 2010. The interest rate of 30 year fixed-rate-mortgage has dropped to 4.88% in May 2010. Earlier the lowest rate was 4.92%. It is claimed that mortgage rates have not been this low since 1956. The rates on 15 year fixed-rate-mortgage have dropped around 4.26% in the 2nd week of June. The interest rates on 5/1 Adjustable rate mortgage (ARM) have dropped around 3.82% in the 2nd week of June. Even if interest rates on ARM have reduced, and it’s possible for you to manage the low monthly payment, yet you may refinance your ARM to an FRM so as to carry on with fixed monthly payments.



Now, it was expected that mortgage rate would rise by April 2010. But that has not happened. Actually, the mortgage rates are low as the investors are quite nervous after Greek debt crisis. And when they are nervous, they go for safe investments like treasury securities. No one can specify the date on which the mortgage rate will rise again. But it is claimed that when inflation kicks in, mortgage rates will increase. Till then mortgage rates will remain low.

Most of the applicants are able to refinance different types of loans. However, it is also a fact that not all are able to refinance. It has been reported that around 30% of refinancing applicants have been rejected as the value of the homes has declined. Around less than 10% refinance applications are rejected outright. This is not at all surprising given the fact that the US housing market has declined since 2008.

Finally, refinancing is worth the trouble only when there is a reduction in the monthly mortgage payments and the closing costs. It has been observed that the volume of refinance applications has increased drastically after the interest rate of mortgage has declined. As a result, mortgage companies have to recruit more people so as to process the increasing number of refinance applications.