When Is the Best Time for Home Mortgage Refinancing?

By Franklin Rhodes • August 9th, 2010

The new headlines around historic lows in home mortgage rates have many homeowners dreaming about lower monthly payments.  Unlike a few years ago, home refinancing is feat to qualify for as loan guidelines have become increasingly more difficult.  Just Thursday, Freddie Mac said that home loan rates hit record lows for the sixth time in seven weeks.

Who would not want to lock into 4% home loan? But before counting all the money you’ll save, know this: Getting one of these oh-so-enticing loans isn’t easy. Want to know the ins and outs of refinancing? Here is the lowdown:

QUESTION: My lender said our mortgage was under water. Can I still qualify for home mortgage refinancing?

ANSWER: Technically, the answer is yes. There are some government programs that are available. If you have a Fannie Mae-owned loan, you can refinance even if you owe up to 25% more than the house is worth. To see if you have a Fannie Mae loan, go to fanniemae.com/loanlookup. There’s a similar program for Freddie Mac loans, too. Go to https://ww3.freddiemac.com/corporate/, to see if you have a Freddie Mac loan.

Before you get too excited, however, local mortgage brokers say that qualifying for one of those programs verges on impossible. “Probably less than 10% of homes under-water are actually eligible,” said David Van Waldick, an independent broker with Western Mortgage in Carlsbad. “It’s real difficult, I’ll tell you that.”

QUESTION: My friend said she got a 4.25% mortgage, but I my lender just quoted 5%. How is that possible?

ANSWER: Much like snowflakes, no two homeowners have the same situation. It depends on the size of the home loan, the value of your property, your credit score and your job situation. Your friend may qualify for a no cost mortgage as well if her credit score is above 720 and she is working with an aggressive lender. If you’re self-employed, for instance, it can get particularly tricky. And remember home loan rates can change constantly so there will always be a bit of difference between them. Because of that fact, get quotes on the same day so you can compare apples to apples, said Belinda Austin, a loan officer with Ranch & Coast Mortgage Group Inc. “The interest-rate market ebbs and flows with the bond market, and the only way to know if you are receiving the most competitive rate is to shop lenders and banks on the same day against each other,” she said.  Article was reprinted from the San Diego Union Tribune.

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