How to Refinance a Mortgage

The interest rate on the average 30 year home mortgage with zero points dropped 1/8 of a percentage point today, down to 5-3/4 percent. If the home mortgage market continues in its current direction, interest rates should remain at this level. The 30 year mortgage interest rate with one pre-paid point dropped 1/8 of a point to 5-1/2 percent. The 30 year mortgage interest rate with two pre-paid points dropped 1/8 of a point to 5-1/4 percent.

To learn about refinancing your home mortgage loan, and how to save money doing so, sign up for our free course, “Five Things You Need to Know Before Refinancing a Mortgage” using the link below.

Refinance a Mortgage - Five Things You Need to Know

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Now is the time to refinance a mortgage: here’s why.

Applications for home mortgages loans dropped for the second week despite a decline in fixed mortgage interest rates this month. A survey of national lenders said the seasonally adjusted index of mortgage applications, which includes both purchases and refinancing, dropped 4.5 percent at the end of August. The week before, the index dropped .7 percent. The survey’s adjusted purchase index fell 3.6 percent to 470.6. The refinancing index also dropped 5.4 percent to 2,187.8.

Fixed 30 year mortgage interest rates dropped 5 basis points, to an average of 5.73 percent, versus 5.78 percent in the week before. The 30 year mortgage interest rate, considered a benchmark, has dropped 5.91 percent at the end of August. The 30 year mortgage interest rate is below its 2005 high of 6.08 reached in March and still above the 2005 low of 5.47 back in June. It is also higher than where it stood last summer when the mortgage interest rate was 5.75 percent. Fixed 15 year mortgage interest rates averaged 5.36 percent this week, down from 5.41 percent.

Adjustable interest rate mortgage loans have gone up. Interest rates on one year adjustable interest rate mortgages loans went up 4.88 percent last week from 4.84 the week before. Demand for this type of loan has been on the decline this moth. ARMs were 27 percent of the total mortgage loan applications last week, which was down from 28.1 percent the week before. With ARMs, lower initial payments allow prospective homeowners to buy homes they may not be able to afford with a fixed interest rate mortgage loan.

In the survey for the week ending August 26th, refinancing increased overall as a percentage of mortgage applications taken, up by 43.8 percent. To learn more about refinancing your home, sign up for our free guide “Five Things You Need to Know Before Refinancing a Mortgage,” using the link below.

Refinance a Mortgage - Five Things You Need to Know

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Federal laws that regulate mortgage lenders were mostly put on the books in the 1970s; back when small local Savings & Loans wrote the majority of home mortgage loans. Thirty years later, the mortgage industry has changed dramatically. But the basic regulatory laws have not. As a result, a growing share of the mortgage loan process is not regulated. An national survey of home mortgages shows African-Americans are four times more likely than Caucasians to borrow with a high interest rate. Many of these mortgage loans came from companies that exist to serve customers who cannot qualify for mortgage loans from banks.

Members of Congress say they need to determine whether race plays a role in mortgage loan pricing. A report on national mortgage lending, including interest rate pricing, will be released this fall. Critics of the report say the disparities found in this study show federal laws governing mortgage lending fail to enforce equal housing opportunity among races. Regulators are also concerned that the new high interest rate loan industry, which serves many minorities, is not watched carefully by federal regulators.

A growing number of these lenders are not banks. The largest banks sell loans in areas where they do not have branches; this has resulted in a national monopoly of volume mortgage underwriters. Banks are reviewed by the federal government to ensure they are complying with fair lending laws. Many high interest rate lenders are never reviewed; though the FTC can investigate complaints about their mortgage lending practices.

Banks argue that existing laws protect homeowners sufficiently, that any increased regulation would hinder the industry.

To learn more about protecting yourself from predatory lenders, sign up for our free guide using the link below.

Refinance a Mortgage - Five Things You Need to Know

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Several mortgage lenders now have disaster relief provisions in effect for homeowners in Mississippi, Louisiana, Florida, and Alabama as a result of the damage caused by Hurricane Katrina. With disaster provisions, lenders help homeowners in many ways. This help includes suspending home mortgage payments, reducing the payment amount, or in severe cases, starting longer loan repayment plans. This help is offered on a case by case basis, and is intended to meet the individual needs of the victims of Hurricane Katrina.

In addition to repayment help, many lenders are now temporarily discontinuing reports of delinquency to credit bureaus as a result of the Hurricane. For information about mortgage repayment relief, homeowners who are under hardships should contact their lenders for assistance.

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Mortgage Lenders are pulling their best deals as hopes of deeper cuts in mortgage interest rates fade. Homeowners wanting to refinance their mortgages should act quickly because interest rates on fixed mortgage loans are likely to rise soon. When interest rates were cut this month, many were predicting a further drop before the end of the year. As a result, the interest rates on fixed rate mortgage loans were expected to remain at the current low levels and even drop over the coming months. This now seems less likely.

A number of mortgage lenders have pulled their fixed rate deals over past weeks as the chances of another rate cut later this year has diminished. A recent survey showed a jump in inflation during the month of July, up from June. The pressure is on lenders to increase the cost of their fixed rate deals, so now is a good time to lock in a low rate.

If you are coming to the end of your existing deal and are looking to refinance to a fixed interest rate, apply now. It takes an average of about two months to refinance a mortgage. However, if you wait too long to see if rates drop further, you could lose out.

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