Is it Time for You to Refinance?

In the past two weeks, interest rates began to inch up slightly. This week, RealtyTimes.com reports that today's interest rate fell back. The current interest rate is 4.75% for a 30-year mortgage and 4.5% for a 15-year fixed rate. That report led to today's blog. Depending on your current interest rate, it just may be time for you to consider a refinance. If your loan's interest rate is around 6.5%, a refinance is definitely something you should check into.

* A reduction from a 6.5% to the current 4.75% interest rate would result in a savings of over $200 a month.

If that statement made you perk up your virtual ears, then I would like to remind you about the Making Home Affordable Refinance program sponsored as part of the recovery plan.

* You do not have to be in a distressed situation to take advantage of the program.

Anchorage is one of the places in the nation that the Making Home Affordable program can be of real benefit since our housing has not suffered the steep decline in values that other areas in the lower 48 have experienced. Both Making Home Affordable program and FHA will refinance the loan balance for homeowners who owe more than the property's current value.

* The Making Home Affordable program will refinance your loan balance if it is no more than 105% of the value of the home.
* FHA will refinance your loan balance if the first mortgage is less than 97% of the homes current value.

If you have equity in your home and pay PMI (Private Mortgage Insurance - insurance lenders require if the home was financed with less than 20% down), the savings could be even greater.

* PMI may no longer be required.

Most homeowners can take advantage of the government refinance loan programs.

* Making Home Affordable Program applies to Fannie Mae and Freddie Mac loans.
* FHA also offers a refinance program.

If you have a first and second mortgage, a refinance could eliminate your second mortgage.

* Make only one mortgage payment and save thousands of dollars in interest.

Check out all your options on the type of refinance which will best meet your circumstances and goals before you make a decision.

* Making Home Affordable Program
* FHA Refinance (even if your current loan is financed through FHA)
* An FHA Streamline (current loan must be FHA loan)
* Conventional refinancing through a mortgage lender

Taking advantage of today's refinancing opportunities may be a wise decision, but it does depend on your personal circumstance, finances and goals. I do think it is to the Anchorage homeowner's advantage to check out the possibility of a refinance. When considering a refinance you need to look at your long time goals.

* A refinance is not free. There are fees and points to consider.

According to the various economists and mortgage lenders, interest rates are not expected to decline any lower than 4.5%. However, they are expected to increase as the housing market improves, loan applications increase and the economy recovers.

Pauline Hofseth, your Anchorage real estate resource