Mortgage refinance has always been the choice for homeowners when mortgage rates are lower. In the beginning of this year, mortgage rates fell below 6% for the first time since 2005, leading to a surge in mortgage refinancing. In January, more than half of the all mortgage loan applications were for mortgage refinancing. Just in the first week of the year, mortgage refinance volume jumped 53.9 percent, accounting for 57.7 percent of total home loan applications.
Homeowners led the surge in these applications as they wanted to refinance more expensive loans. Thus far, more than six out of 10 mortgage applications have consisted of refinances. But interest rates on mortgages have been fluctuating; the average 30-year mortgage hit 6.2% by Februarys end, up from 5.6% in January.
However, last week, the rates reached historic lows again as 30-year fixed mortgages dipped below 6 percent to an average of 5.87 percent. The mortgage rates on 15-year fixed mortgages, a very popular refinancing choice, dropped to 5.27 percent last week, a slip from 5.60 percent two weeks ago.
This is the perfect time to perform a mortgage refinance as interest rates are at historic low rates. If you have an adjustable rate mortgage (ARM), refinancing may be a good move. Many ARMs are expected to readjust this year and, if inflation keeps rising, your mortgage rate may jump to unaffordable levels. Still the increase may not end, you might very well face the possibility of another increase every year after that.
Recently, the government readjusted Fannie Maes and Freddie Macs conforming loan limit from $417,000 to $729, 750. If your once jumbo loan now fits the criteria of a conforming loan, you have the best opportunity to refinance to a lower mortgage rate.
Generally, jumbo mortgages are about one percentage point higher than conforming loans, thus converting to an applicable conforming mortgage refinance loan can save you thousands of dollars in the long-term. No one can guess what the long-term may hold, so take advantage of an opportunity that is currently available to you. Residential real estate prices are falling, if home values keep going down, you may find it harder to refinance later on. At present, you will need at least 10% equity in your home to be approved for a refinance.
You can calculate your equity by getting a current estimate of your homes value and subtracting it from your mortgage loan balance. In order to get the best refinancing deals, a good credit report and credit score would be ideal.
Dont wait long to refinance your home, if you wait you might just lose out on an historic opportunity to leverage low home loan interest rates. Do a mortgage refinance now and save thousands later.