Mortgage Troubles? Consider Refinancing

by Donald Hanz on Mortgage

For the first time in three years, mortgage rates dropped below 6 percent as recorded at the beginning of the year. Many homeowners took advantage of this and took out new loans to refinance existing ones to avoid foreclosure. For them, it might be the only chance they have to enjoy a cheaper loan and keep their homes.

If you are holding back on the decision to refinance, you might consider these reasons why it might be the right time to take out a new loan.

  • ARM – if you have an adjustable rate mortgage that is scheduled to reset this year, it might be wise to refinance now. You will certainly enjoy much savings especially with the rising inflation that could mean yearly increases in your mortgage payments.
  • Falling Home Prices – in the past three years, home prices have declined dramatically, leaving owners with reduced home equity. If you wait too long before making a decision to refinance, you might find yourself getting rejected. Most lenders approve refinance applications if the owners have 10-20% home equity values. Calculate the equity you have on your home at present by getting your home’s current market value and then subtracting your mortgage debt from this amount. The difference is the equity you have on you home.
  • Good Credit Record – another reason for you to consider refinancing now is your unblemished credit record. You certainly should not wait for a missed mortgage payment entry in your credit history that could deduct valuable points from your credit score. You should take advantage of your high credit score and pristine record right now in order to get approved for a refinancing loan and quickly and enjoy the lowest mortgage rates as well.

By considering these reasons, you might finally realize how financing might be the solution to your mortgage problems. You should immediately act now before it is too late to even think about this option.

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