Improved Home Refinancing and Mortgage Debt Reduction

Bill Hitchcock November 8, 2012 0
Improved Home Refinancing and Mortgage Debt Reduction



Home refinancing is getting some great news from Freddie Mac. They are reporting that third quarter of this year saw an average interest rate reduction of 1.7 percent with a savings of about 31 percent in interest rate. Freddie Mac goes on to say that this is the largest percent reduction recorded in 27 years of analysis.

“On average, borrowers who refinanced reduced their interest rate by about 1.7 percentage points. On a $200,000 loan that translates into saving about $3,500 in interest during the next 12 months,” according to Frank Nothaft, Freddie Mac vice president and chief economist. 

Freddie Mac continues with the great news with this headline, “83 Percent Of Refinancing Homeowners Maintain Or Reduce Mortgage Debt In Third Quarter”.

Reducing mortgage debt through home refinancing is a good thing but what does all of this good news mean? Here are the bare bones of the home refinancing report just released.

Current 30 year fixed mortgage rates are around 3.5 percent. Current 15 year fixed mortgage rates are around 2.8 percent. Interest rates change daily and are based on credit worthiness, income, etc.

Home refinancing was done by folks who had owned their home for a little less than five years. They bought during the bubble when money was free and easy but home prices had escalated to an all time high. Consequently the homes refinanced had depreciated in value on average by 10 percent.

Home Refinancing Mortgage54 percent of the home refinancing required no extra money put into the house!

17 percent of the home refinancing had folks putting at least 5 percent more of the unpaid balance to be able to refinance. 29 percent had a lower unpaid balance than their initial loan. In other words-They had built up equity in their home.

Five years was the average length of the mortgage for folks who refinanced their home during the third quarter of this year. To show the difference that five years can make, back in 2006 homes had appreciated 34 percent. But for the folks seeking home refinancing 88 percent of them had to put 5 percent or more down. So while current conditions see 10 percent depreciation in home value, 83 percent were required to put nothing into their home to refinance plus they were able to reduce their interest rate on average of 1.7 percent. This amounts to big saving in terms of monthly payments.

If refinancing a home, home equity refinancing, mobile home refinancing is something you are considering then there are a couple things you can do right now to see if it is a viable option.

First off go online and access a mortgage refinancing calculator, home refinancing calculator, mortgage debt reduction calculator, mortgage debt ratio calculator – some tool that will enable you to see how much money you can save each month by refinancing. The average from last quarter results show people who refinanced averaged almost a $300 a month savings. But if you plan on keeping your home then your savings could be on up into the 100’s of thousands of dollars over the life of your home loan.

Do a Google or Bing search for one of those calculators and find out how much money you can save.

Your ability to get home refinancing is mostly dependent upon your credit score!

The average credit score has been 750 and up. You can go online to access a credit score estimator or a free credit score online website but the reality of the situation is that there are too many variables for these resources to be effective. Go find a mortgage broker or make an appointment with a banker. It doesn’t cost anything to sit down and get the facts about your current financial and credit status.  

It cannot be stressed enough that one of the great virtues of the face to face meeting with a lender is that when they do a credit score check that they will find out why your credit score is not perfect. That’s a good thing! The initial visit is the time to find out any deficiencies or discrepancies in your credit history that need to be fixed and cleaned up! The actual application of the second mortgage or home refinancing is not the time to discover these things. All that happens then is you get turned down.

Home Refinancing

Interest rates are at historic low levels. Because of the Treasury Dept’s quantitative easing program trillions of dollars have been loosened up for home mortgages. Now is a great time if you are contemplating home refinancing, a first time home buyer or a new home purchase.

By the way, there have been a lot of request for information about reverse mortgages but that’s a topic for future discussion. In the meantime you may want to take a look at the Wells Fargo reverse mortgage calculator as well as investigate reverse mortgage complaints, But more on all of this in the near future.

Read and watch all of the current and archived NEWS and POLITICS here at Live and Local ENC with Bill Hitchcock

Home Affordable Refinance Propram (HARP): Home Refinancing

HUD and Refinancing Your Home: Home Refinancing

Realtor:  Home Refinancing

FHA: Home Refinancing


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