Refinancing Mortgage | Gallagher: Refinancing Mortgage Now May Be Timely Idea

September 4, 2010 – 12:52 am

Mortgage rates hit yet another new low this week ” 4.42 percenton a 30-year loan. That’s the lowest since Freddie Mac begankeeping track in 1971.

So, if you’ve been thinking about refinancing, is now the timeto strike?

The answer is yes, probably. Rates may go lower in the next fewweeks; no one knows. When they hit bottom, we won’t realize it.

But the consensus among economists is that our slow-poke economywill eventually pick up steam and interest rates will then gohigher. If you lock in now, chances are you’ll be slapping yourselfon the back in a couple of years over the good rate you got.

Interest rates are notoriously hard to predict. For what it’sworth, the Mortgage Bankers Association forecast last week that30-year rates will be at 5 percent a year from now, and 5.8 percentin mid 2012.

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If you’re eligible to refinance, consider yourself lucky. In St.Louis, 18 percent of homes were worth less than the mortgage onthem as of June, according to the real estate tracking firm Zillow.com . Many other homeowners no longer have the 20 percentequity needed to avoid expensive private mortgage insurance.

“You can be the perfect borrower, but you won’t qualify torefinance because the neighbor next door went into foreclosure andthe house sold for 50 cents on the dollar,” says Doug Schukar, CEOof USA Mortgage, one of the largest mortgage banking operations inSt. Louis.

Appraisers have become tougher since the government took themout from under the financial thumb of lenders and real estateagents looking to close a deal.

“In just the last 90 days, we’ve been hearing more and moreabout lower appraisals,” said Schukar.

People with underwater mortgages can still refinance if theyhave good payment records and their loan is backed by Fannie Mae orFreddie Mac. The government-operated behemoths allow refinancing ofloans up to 125 percent of the home’s value. If your current loandoesn’t require mortgage insurance, you won’t need it for the refi.You can find out if Fannie or Freddie back your loan at www.fanniemae.com/loanlookup/ or www.FreddieMac.com/mymortgage.

Mortgage lenders have tightened their standards since theyhelped KO the economy in 2008. The mortgage rates you seeadvertised are for the most credit worthy customers.

If your credit score is under 720, you probably won’t get thebest rates, says John Frank, president of Paramount Mortgage inCreve Coeur. If it’s under 640, you’ll find it

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