Mortgage rates continue to be low – hovering around 3% to 4% for a 30-yr fixed rate mortgage – and borrowers have a renewed interest in seeing if they can refinance. Borrowers across the nation are wondering if it is the right time to buy a home or refinance. Before you apply, be sure you do your homework to ensure it makes sense financially, and to see if you’re actually able to do it. In many areas home prices have fallen and mortgage underwriting has become a lot more stringent, making it especially difficult to get approved for a mortgage.


If your current rate is in the 4% range for a 30-yr fixed rate loan, it may make sense to obtain a 15-yr mortgage in the 3% or lower area. This is especially true if you plan to stay in your home for the long haul. The cost of refinancing has gone up, so spreading this expense over a number of years can make sense – but usually not for someone who is only going to keep their home for a short period. Ask your lender to run the numbers.


Assuming you do decide to refinance, check your credit scores long before you begin the process. If your credit scores aren’t in great shape, you may not be able to qualify. But if your scores are looking good, try your best not to apply for credit cards or any other type of loan, or making big charges on existing lines of credit, as events like that have a negative impact on your credit profile. You should also check your property value. Without equity (the house being worth more than the loans on it) it will be nearly impossible to refinance unless you’re able to take advantage of one of the government programs or bring cash in at closing (cash in refinance).


Other things to keep in mind prior to refinancing are, “Is your property listed for sale?” (It should not be.) Is there a prepayment penalty on your current mortgage? There are other considerations, but give your lender a call – they can help.



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