With the roller-coaster in Wall Street and the crisis in Europe has helped push mortgage rates closer to a record low. With this, we are expecting an increase in mortgage refinancing. Freddy Mac announced on May 27 that the average 30 year fixed rate loan was lowered to 4.78%. This represents the lowest rate this year and barely above the record established on December 2009 of 4.71%.
This window of opportunity is not expected to be there for long. As the confidence of investors continue to grow, they will shift money from the bond market to the stock market which will make mortgages more expensive. The Mortgage Bankers Association has announced an increase in mortgage refinance. However, many homeowners due to the collapse in home prices they bought homes during the housing boom and have little or no equity left, so they can't refinance — a problem compounded by far tighter lending standards these days.
Before you decide to refinance your mortgage you should think carefully the process and costs, since upfront costs can be high and new mortgages extend the period of indebtedness unless borrowers substitute a shorter-term loan. However, sometimes the savings can be substantial: A monthly payment of principal and interest on a $350,000 loan at 6.25% is $2,155; at 4.75% the payment is $1,826, saving nearly $4,000 a year.
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