12 September 2007
Foreclosure doesn't just happen to people who don't make their mortgage payments. Your homeowner's association (HOA) can take your house or condo if you're not careful. In one case, a disabled California man lost his home in a foreclosure sale because he was $123 behind on his homeowner's dues. The house was worth $280,000. Unfair? Abusive? You bet!Read More »
Be Alert for Mortgage Refinance Opportunities
By Richard BarringtonNFNS Columnist
There are many
reasons to refinance a mortgage, but the most popular is when it is possible to
obtain a significantly lower interest rate by doing so. You shouldn't refinance
every time mortgage rates tick down a little--you'd spend a fortune on closing
costs by doing so--but you should be alert for significant changes in interest
rates.
Odds Are You'll Get a
Chance to Refinance Your Mortgage
Looking at more than 35 years worth of monthly mortgage
data, we can track changes in mortgage rates from month to month. We can
therefore tell whether and when a mortgage originated in those months could
subsequently have been refinanced for a better deal.
Using half a percent as an example of a drop in mortgage
rates significant enough to cover closing costs, we find that 89.3% of the
time, 30-year mortgages would have had at least one opportunity to be refinanced
at a significant savings.
In other words, history says that there is a very good
chance that you will have an opportunity to save money by refinancing at some
point over the course of your mortgage.
How to Prepare
The catch is that these refinancing opportunities can be fleeting--mortgage rates bounce around from month to month. Therefore there are some things you should do now so you will be ready to act when the opportunity presents itself:
- Use a mortgage calculator to determine your target rate--a rate low enough so that the savings more than covers closing costs.
- Have an understanding of the application process, so you will have all the necessary information handy.
- Monitor
mortgage rates regularly--at least once a month.
History shows that some mortgage holders have had to wait
many years for an opportunity to refinance, while others have gotten a chance
after only a of couple months. In other words, there is no telling when the
chance will come, which is why advance preparation is so important.
Source:
Freddie
Mac
About the Author:
Richard Barrington is
a freelance writer and novelist who previously spent over twenty years as an
investment industry executive.
About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.