Mortgage Rates Fall for Week of May 10

Mortgage rates fell again last week on continuing poor economic news. Investors' losses were gains for homeowners and home buyers, though, who found low average mortgage rates for refinancing or home purchases.

HSH Associates reports that combined average mortgage rates for last week fell from the previous week. Rates for 30-year fixed-rate mortgages (FRMs) moved lower by 5 basis points to 5.27%. Mortgage rates for 15-year FRMs declined by 4 basis points to 4.68%. Mortgage rates for a 5/1 hybrid adjustable rate mortgage (ARM) offered an excellent deal after moving downward by 8 basis points to 4.30%--nearly a percentage point below 30-year FRM rates.

Home Refinance Options

Homeowners typically refinance their mortgages for reduced mortgage rates, which lowers their monthly payments. Lowering your rate isn't the only reason to refinance, however. Trading one mortgage for another can help you meet other financial needs as well. Here are additional refinance options that may provide benefits given your situation:

• Refinance to reduce uncertainty or risk: First-time buyers or those not intending to stay in their home for long may choose mortgages offering the lowest possible payments in the short term, such as ARMs. Although these loans assist with transitioning from renting to owning a home, there's the risk that mortgage rates may increase in the near future. Converting from an ARM to a FRM provides stable principal and interest payments for the long term and eliminates features allowing unmanageable rate adjustments or even an increasing mortgage balance. The opposite case may be true, too--a homeowner with plans to sell in the next few years may refinance to take advantage of the extremely low initial fixed rate of a hybrid ARM.
• Refinance for additional cash (cash-out refinancing): A cash-out refinance can provide additional funds for home improvements, debt consolidation, and other needs. Qualifying for cash-out refinancing depends on how much home equity you have, as determined by a home appraisal.
• Refinance to shorten your repayment term: Refinancing from a 30-year mortgage to a 15-year mortgage can help you save thousands on mortgage interest repaid over your loan term, if your income permits the higher monthly payment.

Request multiple mortgage quotes to find home refinance terms to match your objectives. Our live database of current mortgage rates can help you find the best mortgage rates in your area.