Heads-Up Homeowners: Mortgage Refinancing Opportunities are Reappearing

By Richard Barrington
NFNS Columnist

A significant mortgage news item was released in early September to relatively little fanfare. It seems that mortgage application activity, which had been mired in a downtrend, has turned upward more recently. Should this trend continue, it could well be a signal for more and more existing mortgage holders to consider refinancing.The precise conditions under which refinancing makes sense vary according to the terms of each homeowner's existing mortgage. However, the general trend which improves conditions for refinancing--the availability of lower refinance rates--is more universal.

Refinancing Activity Leads Upturn in Mortgage Applications

The Mortgage Bankers Association reported that mortgage application activity has been on the rise lately. While some of this is attributable to new mortgage applications--not a bad sign, in its own right--refinancing applications rose at an even greater rate.

The key has been an overall drop in interest rates since mid-July, meaning that refinance rates are now lower than original mortgage rates for increasingly more homeowners.

Research Your Target Refinance Rates In Advance

Interest rate markets can be volatile, and of course, the approval process is never immediate. Therefore, you'll want to do some research in advance so you can take advantage of favorable refinance rates when they become available.

Use a mortgage calculator to make a comparison between your existing mortgage terms and a mortgage using a target refinance rate. Experiment to find a target refinance rate that represents enough of a savings to justify closing costs, and overall would make it worth going through the application process. Once you've established your target refinance rate, you'll be able to monitor prevailing rates from week to week and be ready to act when refinancing makes sense to you.

When doing this analysis, try to use apples-to-apples comparisons--preferably, comparing one fixed-rate mortgage to another, over a similar length of time. The right information could be worth significant savings to you when the time comes.


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