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Is It The Right Time To Refinance?

June 20, 2012

Refinancing is becoming a volatile endeavor for homeowners. Mortgage rates have continued to plummet, allowing many homeowners to undergo a period of constant refinancing to cut the extra dozens – to hundreds – off their mortgage payment. However, it’s never as cut as dry as simply seeing a low interest rate and then jumping to refinance with your mortgage.

Depending on what kind of loan you have, the refinancing options are going to vary – for example, refinancing a USDA loan is going to have different requirements than refinancing a VA loan or refinancing an FHA loan. Guidelines seems to be more important than ever – and for the first time, there are other key considerations to keep in mind when entering into the agreement than just “what is the interest rate today?”

Considering Closing Costs

Closing costs tend to add two to four percent to the overall loan value. Most consumers will add this amount to the lifetime amount of the loan, but if your interest rate reduction is miniscule, the pain in the neck this can cause on top of the closing cost might actually mean your expected value (also known as EV) may result in a net loss in the reduction, especially when you consider the value of your time.

Can You Even Qualify for A Refinance?

Many homeowners may misappropriate their actual ability to refinance a home. If you’re underwater on your loan, it’s unlikely that you will be able to qualify for a loan unless you fall under the new HARP program designation, which allows you to refinance a Fannie Mae or Freddie Mac loan that was sold to them on or before May 31st, 2009. This is, of course, if you are current on your mortgage, as the program is meant to benefit homeowners who faced unfortunate side effects of a sliding housing market.
Similarly, if you have bad credit, few banks will offer you an interest rate that matches the current conditions of the market. Just because you see a low mortgage rate nationally doesn’t mean that your 520 credit score will secure you a great interest loan.

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Is having a home even the right long term option?

Many homes are meant to be an investment, but with the crash and the erratic state of the market, it may behoove you to just not move forward with refinancing and instead look towards renting as a better option. Are you making less money because you are stuck in one place at a dead end job? What if you could make $30k more at a position that you had to relocate for? Saving just a hundred or so over a year might not be the right long term decision for your life, family and financial record.

Refinancing – Not So Fast

Refinancing is a great option for the right person. People with job stability, a health mortgage and credit score, and etc can all benefit from the current mortgage rates. They probably won’t last forever, but who knows – these rates continue to oscillate with the volatile market conditions. Keep an eye on your rate target, be financially smart and then act accordingly to best benefit your financial future.

Filed Under: Arizona Refinance Tagged With: Arizona Refinance, az fha refinance, AZ refinance, az usda refinance, az va refinance

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When inquiring about a mortgage on this site, this is not a mortgage application. Upon the completion of your inquiry, we will work hard to match you with a lender who may assist you with a mortgage application and provide mortgage product eligibility requirements for your individual situation.

Any mortgage product that a lender may offer you will carry fees or costs including closing costs, origination points, and/or refinancing fees. In many instances, fees or costs can amount to several thousand dollars and can be due upon the origination of the mortgage credit product.

When applying for a mortgage credit product, lenders will commonly require you to provide a valid social security number and submit to a credit check . Consumers who do not have the minimum acceptable credit required by the lender are unlikely to be approved for mortgage refinancing.

Minimum credit ratings may vary according to lender and mortgage product. In the event that you do not qualify for a credit rating based on the required minimum credit rating, a lender may or may not introduce you to a credit counseling service or credit improvement company who may or may not be able to assist you with improving your credit for a fee.

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