More Homeowners Consider Refinancing

Because of the decrease in mortgage rates to record lows, homeowners’ demand for refinancing has increased across the nation.

According to lenders and mortgage experts, all types of homeowners are attempting to decrease their monthly payments especially with the rates for 30-year mortgages decreasing to less than 4 percent ever since October of the previous year.

Mike Fratantoni, vice president of research for National Mortgage Bankers Association in Washington, D.C., said that nationwide refinance volume is at a three-year high in the past few weeks while mortgage rates stayed at record lows. Fratantoni added that the number one cause for the increase in refinances is interest rates.

Together with months of interest rates at record lows, some of the other factors that push the refinancing boom include the competitive lending market and modifications in a few federal refinancing programs intended for distressed homeowners.

There are advantages in refinancing a mortgage and some of these include reducing the monthly payments, eliminating the uncertainty of an adjustable-rate mortgage by changing it to a fixed rate, opening home equity cash to cover home improvements or college costs, and most importantly, shortening the loan term can result to thousands of savings in terms of interest.

According to John Winters, a wealth adviser at Morgan Stanley Smith Barney, he recommended all his clients to consider refinancing their mortgages, especially those who find it hard to live with little returns on CDs and bonds that have low interest because it can free up monthly income.

When considering refinancing a mortgage, you basically look at how long you think you are going to stay in your present home and whether or not the upfront costs offset the monthly savings. Greg McBride, senior financial analyst at, said that you are not going to earn back the closing costs if you’re not staying in your home for a year or two.

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