Is Now the Time to Refinance?

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) March 11, 2009 -- SAN MATEO, Calif. – Home mortgage rates are up half a percent from one year ago, but down half a percent from March -- and while this latest rate decrease has led to a surge of home refinancing activity, Andrew Housser, co-CEO of Bills.com, suggests homeowners consider the pros and cons of refinancing in their situation before they sign up for a new deal on their home loan.

"Some homeowners are sitting on adjustable rate mortgages (ARMs) wondering if now is the time to refinance to a fixed-rate loan. They worry -- and rightly so -- about payments increasing, especially in an atmosphere where home values might decline," Housser said. "Other homeowners want to use cash from their equity to pay for kids’ college tuition, take advantage of lower prices to put a down payment on a second home, or remodel existing homes."

In light of the confusing market, Housser's company, Bills.com, suggests the following tips to help homeowners decide if they would be wiser to refinance now or keep their current mortgage.

Pros: Refinance now if …

1. ARM rates are rising above market rates. As interest rates increase, ARM loan payments do, too. Homeowners concerned about payments, and whose rate is higher than current fixed mortgage interest rates, might consider refinancing. "Many economists forecast basically stable interest rates through Thanksgiving or so, but with the amount of uncertainty in financial markets, there's no telling," Housser said.

2. Refinancing is affordable. Refinancing involves expenses that can total around 2 percent of the total loan amount. Typically, financial advisors suggest refinancing is worthwhile if the savings on payments will pay for the refinancing costs within two years. Homeowners can calculate their own "break-even" date by dividing the up-front cost (the figure on the Good Faith Estimate form) by the anticipated monthly savings. The answer is the number of months it will take to pay off the refinance and sooner is better.

3. You've grown roots. Homeowners who plan to stay in their homes for a long period of time might find that refinancing makes sense.

4. One loan is better than two. For homeowners with a first mortgage as well as a second mortgage with a high rate, refinancing can combine the two loans into one. Second mortgages usually have adjustable rates.

Cons: Wait to refinance if …
1. Credit isn't stellar
2. Life is in flux.
3. The clock is ticking on private mortgage insurance (PMI) payments.

Housser pointed out that refinancing can be a good way to get a better mortgage, "but it isn't the be-all and end-all for every borrower. Take time to educate yourself and weigh the pros and cons of your situation before making a decision."

Visit: http://www.freedomfinancialnetwork.com/refinance.htm

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