Tuesday, December 2, 2008
Is it a good time for you to refinance?
Mortgage-Rate Drop Sets off Refinancing Rush
Posted Nov 26, 08 8:30 AM CST
(Newser) – The biggest one-day decline in mortgage rates in 7 years set off a frenzy of refinancing yesterday, as homeowners who'd been waiting for a bargain jumped into the market. The nearly one-point decline was prompted by the Fed's $600 billion commitment to buy mortgage-backed securities, reports Bloomberg. "It's the folks who have been sitting on the sideline,” said a Bank of America exec. “They're jumping in with this news."
Economists praised the Fed’s move, which helped drop the average 30-year mortgage rate from 6.38% to about 5.5%, one saying it "may hasten the day when we finally find a bottom in housing.” Some brokers told the Wall Street Journal it was the most activity they've seen in a year. To qualify for lower rates, consumers will need a credit rating above 720 points and have at least 20% equity in their homes.
Hubby and I will be refinancing our mortgage soon because it's finally worth the closing costs and hassle. We'll shave 4 years off of our loan and save thousands of dollars while lowering our monthly payment (but we'll keep paying the same rate we're doing now). But, with every major purchase (and you should look at it that way- closing costs alone can be thousands of dollars) you should shop around for the best deal. Hubby almost took the first good deal and I persuaded him to look around a bit. That right there saves us half a percent and over a thousand dollars in closing costs.
Thank Goodness we still have good credit!
The best time to be frugal is yesterday but today is not too late to start pinching those Lincolns and Washingtons.
We're one step closer to realizing our goal of owing no money. For me, it's not so much about home ownership as it is about not owing anyone or anything.