Rates for Home Mortgage Loans Hover Around 5 Percent
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by: marciafreeman
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The end of March, consumers were delighted to see the interest rate for the average home mortgage still at historically low levels. The Federal Reserve made a decision to keep rates low and many analysts expect them to stay fairly low for the remainder of 2009. In the current economic downturn, it is welcome news for potential buyers and current homeowners interested in refinancing a home mortgage. The one hiccup for some borrowers has been the tighter standards lenders now have in place. A better credit score, cleaner credit history and more money down are now required for most loans. Because of those requirements, less people who apply for a home mortgage are actually approved. Those who currently own homes and apply for refinancing must meet the same standards. The best rate loans now need equity percentages of 20 to qualify and credit scores of 680 or higher. Having sufficient equity to qualify has been a challenge for homeowners in markets that experienced a significant drop in values. One of the goals of the new government housing aid plan is to assist those responsible homeowners who no longer have enough equity, due to a decrease in the value of their homes. Consumers who are under water with the mortgage, however, will not qualify to refinance with the program. Those who have at least 5 percent equity in their homes will qualify.
Many who are considering refinancing a home mortgage are waiting to see if the rates drop below 5 percent. Their gamble may pay off, or the rates may creep back up. As home values are predicted to continue to fall, homeowners who wait take on the risk that the equity in their homes may decrease if the values decline more. Those who are looking into home mortgage refinancing now with the low rates should make sure the benefits outweigh the costs for their particular situation before jumping in. The first task is to add up how much the refinancing will cost. If you only focus on the potential savings and do not factor in the costs, you are missing an important piece of the picture. If you plan to continue to own the house after you recoup the costs and start benefiting from the monthly savings, it probably makes sense for you to refinance.
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