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Homeowners who should refinance now

Recent mortgage rates are the lowest they’ve been in all of 2014. The average 30-year fixed mortgage rate is at 3.97%, and it’s the first time rates have dropped below 4% this year. But these rates won’t stay around forever, so now is the time to take advantage of the market. With rates so low, there are millions of homeowners who could benefit from a refinance. Keep reading to see if you’re one of the four types of homeowners who should refinance now.

homeowners

If your current rate is over 4.50%

Studies show that over 4 million homeowners are sitting on rates that are 5.00% and above. With the ability to save an entire percentage point in interest, why wouldn’t you refinance? Many lenders are also offering a zero-cost refinance, which adds an extra incentive for borrowers. It’s possible to lower your mortgage rate nearly a full percentage point forfree. The caveat with zero-cost loans is that they don’t always mean you save money long-term. Click here for more information on what to avoid when mortgage shopping, so you can go into your search making financially sound decisions.

 

If you have an existing Federal Housing Association (FHA) Mortgage

The FHA Streamline Refinance is an easy way to refinance, with almost no verifications or documentation required. This means are no appraisal costs, proof of income required, or the need to pull credit. An FHA borrower might also refinance because with rising home values, many homeowners are eligible to cancel FHA mortgage insurance premiums.

 

If you have previously been turned down for a mortgage

As we get further away from the housing crash, mortgage standards are becoming more and more relaxed. When polled, almost 25% of banks reported they are loosening qualification standards. This means lenders are accepting lower FICO scores and larger loan-to-value ratios. Additionally, Freddie Mac has lowered standards for those with derogatory credit events, so even if you’ve been previously turned down for a mortgage, now may be a good time to try again.

 

If you are wary of closing costs

With more and more competition in the market, the zero-cost loan is rising in popularity. There is no longer a need to pay thousands of dollars upfront for things like points, lender fees, title fees, and a slew of other charges and fees. If a borrower is willing to accept a slightly higher interest rate, they can typically refinance without paying a penny.

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