The mortgage refinancing business may be about to pick up.
MarketWatch notes:
U.S. fixed-rate mortgages fell in the latest week to their lowest
levels since the spring of 2004, according to
Freddie Mac's survey
released Thursday. The national average interest rate on the benchmark
30-year, fixed-rate loan averaged 5.48 percent in the week ending Thursday,
down from 5.69 percent a week ago and 6.25 percent a year ago. The rate hasn't been
lower since late March 2004, when it averaged 5.40 percent. The 15-year
fixed-rate loan averaged 4.95 percent, down from 5.21 percent a week ago and 5.98 percent a
year ago.
As homeowners refinance this time, it will be interesting to see if they lock in fixed rates rather than being attracted to the adjustable rates that got so many in trouble last time.
Other things to consider:
- How many homeowners cannot refinance because they owe more than their homes now appraise for?
- Will homeowners pull equity out this time as so many did last time?
- Counties that depend on closing fees will benefit, especially in a time when so few homes are selling in some places.
How do you know if it is a good time to refinance? Generally the rule of thumb is the new loan must be at least 2 percentage points lower than your current loan, but the size of the loan (especially large ones) could change that. The other big question is how long you plan to stay in the home you refinance. if you only plan to keep it a short time, then you may not have time to recoup the cost of refinancing.
