Many Americans don't expect the housing market to improve for quite some time, according to a poll. A survey by Trulia and RealtyTrac found that 58% of Americans don't expect the housing market to improve until after 2012. Of those polled, 10% think the market will recover in 2011 and 27% think it recover in 2012. If you, too, believe the housing recovery is a ways away and selling isn't an option, refinancing could be a wise move.
Staying in your home
Many people have been unable to refinance because they either lost their job or are underwater on a mortgage.Lenders want to see some equity in property before approving a refinance.
Some homeowners who really see an advantage to lowering their interest rate have gotten around this problem by bringing cash to closing. A cash-in refinance could allow you to pay down the mortgage principal and boost home equity, making you a more attractive candidate for a refinance. Others try to qualify for an FHA Short Refinance, a program that aims to help underwater borrowers.
Refinancing with equity
Having a significant amount of home equity can work in your favor when looking for a refinance deal. If you have at least 20% equity in your home it also means you won't have to pay for mortgage insurance (MI). Refinancing now could allow you to take advantage of the equity you have. If home values in your area are still headed downward, who knows if you will have enough equity down the line if you wait to refinance?
To qualify for the best refinance rates you need a high credit score. You won't automatically be turned down for a mortgage if you have some debt, but too much debt can keep you from getting the best loan package. Take advantage of your good credit, regular income, and stable payment history to get approved for refinancing, because if you do become a victim of downsizing, it will be tough to refinance down the line.
Current mortgage rates
Of course the main reason most people want to refinance is to lower their interest rate and have more affordable monthly payments. Current mortgage rates are near historical lows and some housing experts say it's only a matter of time before they begin to climb. While you can't time the market to predict exactly what the low point will be, it makes sense to take advantage of low refinance rates if you can. If you can shave at least a percentage point off your mortgage loan, refinancing may make sense.
Take time to shop around and compare refinance rates to get the best deal. In addition to the interest rate, take time to review all the closing costs involved with getting a loan. Mortgage loans vary among mortgage lenders, so it really pays to compare deals.