Refinance rates have fallen to historic lows once again, as the 10-year treasury yield continues its plunge downward. Amazing refinance deals are to be had if you have the credit score and enough equity in your home.
30-year fixed rate mortgages are now at an average of about 4.5 percent for those with excellent credit and refinancing under 80 percent on a conventional loan and under 97 percent on an FHA rate and term refinance. 15-year fixed rate mortgages are hovering near the 4.0 percent level with no points if you have excellent credit. It almost seems hard to believe where refinance rates have fallen.
But, as we all know by now, with the good news comes the other side of the story. Refinance mortgage rates are so low, in most part, because the overall economy is in such tough shape. Two key components, housing and employment, are not looking good, and the future direction of the two are a muddied picture.
Mortgage applications rose 4.9 percent last week as more borrowers refinanced at the lowest rates in decades. Refinancing is at its highest level since May 2009 and makes up 82.4 percent of all new loan activity, its highest share since January 2009. Yet, low mortgage rates have done little to boost home sales, which have been hurt by high unemployment, slow job growth and strict credit standards. Purchase activity is 41.5 percent below its level at the end of April, when two federal tax credits for homebuyers expired.
On the housing front, the National Association of Realtors said sales of previously occupied homes plunged in July to an annual rate of 3.83 million, much worse than the 4.7 million estimate from economists polled by Thomson Reuters. Many feel that without a boost in job creation, (buyers) just won't have the confidence to step in and buy a new home.
New U.S. single-family home sales unexpectedly fell in July to set their slowest pace on record while prices were the lowest in more than 6-1/2 years. Sales dropped 12.4 percent to a 276,000 unit annual rate, the lowest since the series started in 1963, from a downwardly revised 315,000 units in June.
Yes, current refinance rates are just awesome, but if you can’t refinance into the new mortgage, it does you no good. Mortgage underwriting guidelines continue to stiffen as rates drop.
If you have a good to great credit score, solid 2 year employment history, and a decent idea of the market value of your home, it might be a good idea to check on some home refinance options as we may never experience rates this low again.
Just keep your “timeframe” in mind before jumping into a new mortgage. If you think you may be selling your home in the next couple of years for various reasons, do a breakeven analysis to make sure refinancing is a benefit to you. If for instance, for your refinance scenario, closing costs are $3,000 to save $200/month, and your anticipated loan timeframe is 36 months, then your breakeven point is 15 months ($3,000 divided by $200). After 36 months, your net gain will be $4,200 (36 months timeframe minus 15 months breakeven point = 21 months times $200 savings = $4,200 net benefit).
The bottom-line numbers should tell you the story and help to strengthen your decision to refinance or not.
If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.
May the Mortgage Refinance Rates be with You!
Refinance Tool Box
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