Should Your Refinance Your Current Home Loan?

With home loan rates being at record lows, you may be wondering should I refinance? Well, for some people the answer is yes and for others the answer may well be no. There are multiple factors to consider and the tricky part for some people is being able to qualify for a refinanced loan.

Qualifying for a home loan in today’s economy seems to be getting harder by the day. Dropped home values along with falling credit scores are making home loans nearly impossible for some people to get. FICO has recently reported that millions of American, just over 25% or 43.3 million have scores below 600. If you are one of these individuals you most likely will not qualify. If however you can qualify, it could be a great time to refinance.

If you have an adjustable rate mortgage or can get at least ½% lower interest rate than what you currently have, it may be advantageous to refinance your loan. You should however also take into consideration how long you plan to stay in your current home and make sure it is long enough to recoup the cost of a refinance. Typically you should be able to recoup the cost within two years. If it is going to take longer than that then it may not be worth it to refinance.

If you are looking to refinance one of the best pieces of advice you can take is to shop around. Lenders offer different packages and it is important to find one that is right for you. Keep in mind that the lowest rate is often not the best deal. You also need to factor in closing costs, whether or not the rate is fixed or adjustable and the cost of points.

While you are shopping around be sure to consider an FHA loan. While these loans do require you to pay mortgage insurance they tend to be less restrictive, making them easier to qualify for. Down payment requirements are also less than a conventional mortgage.

Once you have shopped around and made a decision on what lender to use, make sure that you lock in your interest rate. Lenders allow you to lock in today’s low rate for a certain number of days while you go through the qualification process.

To learn more about refinancing, apply for a loan and to use various mortgage calculators to find out what your savings could be, visit

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