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When to Lock Your Rate for Mortgage Refinancing
Posted by: | CommentsMortgage refinance rates dropped to new low again this week at 4.42% on a thirty-year mortgage. If you have been considering a home refinance loan, now is likely the time to get approved by a lender and lock into 30-year loan. Yes, refinance rates could go lower in the next few weeks, but they also could rise. But the consensus among economists is that our slow-poke economy will eventually pick up steam and interest rates will then go higher.
When to Lock Your Mortgage Rate
If you can get approved for a refinance loan, consider yourself blessed. In St. Louis, 18 % of homes were worth less than the mortgage on them as of June, according to the real estate tracking firm Zillow.com. Many other homeowners no longer have the 20% equity needed to avoid expensive private mortgage insurance.
Many homeowners have been stuck with underwater mortgage loans as many still are unable to qualify for home refinancing. However under the Home Affordable Refinance Program there are new opportunities for borrowers to refinance if they have they have good credit and they have been making the mortgage payment on time. The only catch is that their loan must be backed by Fannie Mae or Freddie Mac. The government-operated behemoths allow refinancing of loans up to 125 % of the home’s value. If your current loan doesn’t require mortgage insurance, you won’t need it for the refinance. You can find out if Fannie or Freddie back your loan at http://www.fanniemae.com/loanlookup/. Mortgage refinance lenders have tightened their guidelines since they helped knock out the economy in 2008. The mortgage refinance rates you see advertised are for the most credit worthy customers.
If your credit score is under 720, you probably won’t get the best rates, says John Frank, president of Paramount Mortgage in Creve Coeur. If it’s under 640, you’ll find it hard to get a mortgage. The median credit score in the U.S. is 711, according to the scoring company FICO. Mortgage refinance lenders are looking for people such as Kim Johnson. She walked into Paramount Mortgage last month with a high credit score and a down payment of more than 50% to put on a $190,000 home she was buying in Manchester. From signing the contract to closing took just two weeks, and she landed a 4.5% home loan. “I was thrilled. It obviously helped me buy a little more house,” she said.
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