Mortgage Loans Drop for Tenth Week in a Row
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by: marciafreeman
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Near the end of 2008, the government bought a large portion of mortgage backed securities totaling $500 billion. Since then, interest rates for mortgage loans have been shrinking. Freddie Mac starting tracking interest rates almost 30 years ago and the rates today are lower than they have ever been during that period. Lower rates seem to be the one silver lining for consumers caught in the economic downturn, particularly for those who could not afford to purchase a home during the run up in the housing market. The lower rates have encouraged some of those people to jump into the real estate market and take on new mortgage loans. And many current homeowners are refinancing original mortgage loans under the new interest rates. Although the interest rates are enticing, lending institutions now have much tighter lending standards. They now require higher credit scores and more equity, which means that many who may have qualified for refinance in past years may not qualify now. Those particularly affected are homeowners whose home values have decreased significantly since they purchased their properties. The drop in values have left them holding less equity in their homes. Calculating the costs and benefits of refinancing mortgage loans, as well as examining credit files, credit scores and current equity should be part of any decision to refinance.
If you are considering refinancing, begin your research by finding out what rates and terms for mortgage loans are available to you. Then do some simple calculations to help you decide if refinancing makes sense for your current and future financial situation. The most common reason for refinancing is to bring down the payments on mortgage loans. To determine how much you would save, subtract the anticipated new monthly payment from the loan payment you make now. Then add up all the costs of the refinancing. Just like when you obtained your original mortgage, you will have bank fees, documentation and title costs, attorney fees and appraisal costs. Next, determine when you will make up the cost of the refinancing and start saving on your monthly payments (also know as when you "break even.") You do this by dividing your total estimated cost for the refinancing by your estimated monthly savings. This will give you a rough idea of when you will start saving. If you expect to sell the house before you break even, refinancing might not be the best financial move. If you plan to own the house past that break even point, then consider refinancing. If the calculations indicate savings for you, then you too could benefit from one of the new low interest rate mortgage loans.
See also Mortgage calculator - Home mortgage - Mortgage loan - Refinance - Equity loans -
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More references about home mortgage, click to www.getsmart.com/refinance.
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