How To Tell Whether Now Is The Time To Refinance

We’ve been looking at refinancing our mortgage lately.

While in that process I came across an article on MSNBC.com talking about who should consider looking at refinancing right now.

They looked at a variety of factors, but said that you should consider refinancing if:

• You have a fixed or adjustable mortgage with an interest rate over 6 percent.
• Your credit score is over 650.
• You live in an expensive urban market and have a mortgage over $417,000.
• You’re eligible to refinance to an FHA loan.
• You have at least 10 percent equity in your home and aren’t FHA-eligible.

At this time the problem that we’re having is that the value of our home has dropped since we bought it (right before the bubble burst).

So even though we put down a 20% down payment at the time of purchase, our equity is now less than the 20% that a lot of the lenders want. Because of that we’d then have to start paying mortgage insurance as well. How frustrating.

I think if we look around we still might be able to find a lender willing to work with us on the appraised value of our home so that we can be above the 20% equity line, and still get a good deal.

Also, we’d like to find a no closing costs option as well, which isn’t that easy (with rates still low).

The article also gives some reasons you should consider NOT refinancing. Those reasons include:

• Your interest rate on a fixed loan is below 6 percent or you plan to move soon.
• Your credit score is below 650 or your credit report has blemishes.
• Your credit score is below 650 or your credit report has blemishes.
• You live in a “declining market.”
• You’re self-employed or want to pursue a “stated income” or “no-doc” loan.
• You’re facing foreclosure.

The process continues…

Check out the whole article.