Mortgage Rates Are Falling

Last week, 30 year fixed mortgage rates dropped to the mid 5% range as the government announced plans to buy mortgage based securities. However, lending criteria will be much stricter than two to five years ago, where almost everybody qualified. The lower rates most likely helped borrowers in good standing, i.e. are current on payments with a home value greater than their mortgage. According to Bankrate.com , "a good candidate for refinance is a homeowner who:

has good credit;

owns a house that is worth substantially more than the outstanding debt on it;

earns enough to repay the loan and can prove it;

isn't overburdened by student, auto and credit card debt;

has enough cash to pay the closing costs."

For those that can meet the tighter lending criteria and depending on the current mortgage terms, refinancing may be beneficial for those with fixed rate mortgages rates above 7% or those with adjustable rate mortgages who want the security of a stable interest rate.

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This is not financial advice. Please consult a professional advisor.

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