Historically low interest rates have had millions of Americans flocking to mortgage companies in search of savings. While rates remain at near-record lows, they’re inching up, and many predict that the escalation will continue. Is it still a good time to refi, or has the time passed? What’s the truth about refinancing in today’s economy? Here are some myths you may have heard, as well as the truths behind them.
Myth: It’s no longer a good time to refinance your mortgage.
While rates have inched up a bit, they’re still historically low. And programs like the Home Affordable Refinance Program, or HARP, mean that now could be the best time in a long time to refinance.
Myth: If you’ve been turned down for a refinance in the past, it’s a waste of time to try again.
The guidelines for HARP have changed. Many folks who were not eligible
for HARP in the past may now be eligible. Home loan experts estimate that there are millions of Americans who still can refinance with HARP.
Myth: You need at least 20% equity in your home to refinance.
In an ideal world, lenders would love for you to have 20% equity in your home. However, HARP was initiated to help homeowners with little or no equity in their homes. Since the housing crisis, mortgage companies will help you refinance with less than 20% equity.
Myth: You’re going to need plenty of cash on hand to refinance.
Not always. As long as you have enough equity, many costs – such as closing costs, application fees, title insurance and appraisals – can be rolled into the loan, making it unnecessary to pay upfront.
Myth: Rates are rates. You should just stick with your big bank for mortgage refinancing.
Some banks waive fees for their regular customers, but don’t bet on it when it comes to a mortgage or a mortgage refinance. Find the best rate by shopping around – check out mortgage brokers, banks, online banks and companies that offer mortgages only. Double check the fees involved before selecting a lender, as some places build fees into the interest rate.
Mortgage rates are on the rise, but they’re still at historical lows. Find out if refinancing your mortgage makes sense for you, and if it does, do it now. Waiting could cost you!