Interest rates are at a 65 year low, below 5% and home owners are going to lenders to refinance. Banks are being deluged with applications. Marshall Boyd co-presdent of Southwest Bank Mortgage and founding managing partner of William Trew Real Estate Services says he has been though other refinancing crazes but this is the most significan he has ever seen. The number one reason is this is the lowest interest rates have been.
In March rates were again lowered due to the fact that the Federal Reserve is commited to buying up 1.2 trillion in mortgage backed securities and 300 billion in goverment debt.
But the lower rates require that the property owner has a strong credit rating, low debt ratio and at least 20% equity in their home. There are costs to refinance that are unaviodable including origination fees, tittle fee and lenders fees. Refinancing fees run on average about 2.5 to 3% of the loan value.
Refinancing can help home owners that plan to stay in their home for longer than 2 years and can lower their rate by at least 1%.
The bottom in rates will remain as long as there is no good news. It will go up as soon as housing market show improvement.
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