When to Refinance

It is expected that 2 million mortgages will rise by the end of 2008. If we were in a seller's market, then home owners would have nothing to fear. However, since we are in a buyer's market, home owners have much to fear. If your loan is set to adjust, here are a few things that you need to be aware of:

• Look over your loan documents to see just how much it will be adjusting.
• If your loan to value (loan amount in comparison to the value of a property aka ltv) is above 80%, you will not get the best rates.
• 100% loans are harder to get, and if you can get a 100% loan you will more than likely get higher rates.
• Falling home prices will increase your LTV.
• Foreclosures are rising and they do impact the sale/refinance of other homes in the area.
• Appraisers are getting stricter with their search criteria. Radius is being decreased from 1 mile to ½ mile and timelines are being changed from 6 to 3 months.
• If the area you reside is determined to be a declining value area, you may see a 5% reduction from the appraisal price.

The above information can be used as a reference when the time comes to refinance. In-depth market research and loan analysis must be performed before deciding on what actions to take. There area also plenty of additional resources to peruse to reach an educated decision.