The Right Time to Refinance

Mortgage activity has been picking up due to the recent drop of interest rates from the Fannie Mae and Freddie Mac crisis. Many homeowners are inquiring to see if refinancing their mortgages might be a good idea at this time.

As is the case with most borrowers, for some people it will be advantageous to refinance now and for others they may need to wait for interest rates to drop further.

Contrary to newspaper columnists and media reporters, mortgage lenders, loan officers, and mortgage brokers do want to save people money. According to a study, the logic is simple. If they do a good job they will get referral and repeat business from that client. So, it is to their advantage to be a professional and do the best job they can possibly do.

Interest rates declining
It is evident that lower rates in the last few weeks of September have triggered more activity for mortgage companies according to the national Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey. Those trends show no conclusive signs of slowing down either. The financial worries on wall street are driving down rates s mortgage demand will continue to increase. Although the number of inquiries has increased, some will not be able to take advantage due to home values decreasing in some areas. On the other hand, investors or homeowners who waited a long time for a deal are buying the bank REOs at discounted prices.

Therefore, for some individuals, it's an opportunistic time to do something while for others the interest rate might have to dip a little more to justify doing something. The other factor that can play a part is the appraisal. These have been getting cut in value by over-conservative appraisers who want no part in being taken off the lenders approved list from being aggressive or adamant on the property's value.

So still the question remains, "When is it the right time to refinance?" Generally, if a homeowner can get a rate that is at least 1 percent lower than their existing rate, it could be a good idea to contact mortgage lender or broker. In addition, variables such as how long they plan to live in their home and what type of loan they have now, their long term goals, are other considerations. With so many variables arising, there is no real boilerplate answer. So, the best thing one can do is get on the phone, apply online and see what is offered for your situation.

Frank Collins is an avid investor in real estate and contributor to Jumbo Home Loans and a website to Find Low Mortgage Rates and trusted lenders in your area.