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[I376]Interest Only Mortgage Refinance

by Sara Vlazny, Sar

Rising unemployment and what seems like a shrinking U.S. economy has strapped consumers looking for relief by way of Mortgage Refinance. Those seeking lower monthly payments on current Loans seem to be raising the number of applications. The current percentage increase for this week ending January the ninth, of 2009, includes both mortgage refinance and original loans, which is the highest combined, percentage increase since 2003.

Although the purchase market shows growth much slower than that of the refinance market, everyone is hoping the low mortgage rates will boost demand for new Mortgage applications. And for Mortgage Refinance, applications jumped from 79.8 to 85.3 the previous week, which is the highest jump for the Refinance sector alone, since 1990, according to the Mortgage Bankers Association.

The Mortgage Refinance sector will show an increase in applications due to the weakening economy as consumers continue looking for ways to reduce their expenditures. Several factors including the climbing unemployment rate and its role in slowing the economy have contributed to shaky financial markets, keeping buyers from applying for mortgage finance.

With a good part of the World watching and anticipating positive change in a situation some call, “the worst housing downturn since the Great Depression”, there seems to be little sign of recovery even with a significant rise in applications for Mortgage Refinance.

According to some Analysts, including those with Wachovia Corporation, people are still not comfortable with the forecast of the housing market, no matter how low the interest rates are, if job security is in question, it will directly affect income stream. In order to benefit from low mortgage rates or a Mortgage Refinance, these factors have to be solidified before consumers can even think about taking out a loan for property.

When the Federal Reserve announced its plan to buy approximately $500 billion worth of mortgage securities in November of 2008, that were backed by Fannie, Ginnie and Freddie, The 30 year mortgage rates in this Nation dramatically declined. And the Federal Government, prompted by the dive of the finance market, has committed to keeping consumers borrowing costs down by buying mortgage-backed securities. Rates may stay low for a few months, but the future of rates will not stay down forever. If you are looking at a Mortgage Refinance, now is a great time to lock in at a low rate.

Loan requests are up over 200 percent from two months ago at one online real estate service company by the name of http://Zillow.com, mentioned chief financial officer, Spencer Rascoff. Similar companies offering like services have stated they are working twice as hard to handle the increase in volume of Mortgage Refinance papers, and they will avoid hiring more employees due to the normal rise in rates once the market starts to settle.

The Index came in well below its level from a year ago with a 35.9% drop and hit an eight year low in November of 2008. The Mortgage Bankers Association shows their seasonally adjusted purchase index fell 14.1% with applications for mortgage refinance jumping 25.6 percent. And last week's mortgage applications helped their four week average by rising 10.8 percent.

Tips You Sure Can Use

1. Take advantage of free lock-ins, preferably with a minimum of 60 days. Usually, it can take more or less forty-five days from the day of application to close. But there are times when two-month delays can occur, and even more! So look for lenders who are willing to offer you a free 60-day lock-in. But when it comes to mortgage refinance, you have to be cautious and ask all the right questions. You may be promised a free lock-in, but your loan officer might charge you a fee or a very high price for lock-in protection.

2. Use your rescission rights. If you don't like the way your deal has turned out right before closing, you can still re-negotiate or go back to square one. Don't force it if it's a deal turned sour for you. Keep in mind that you're given three working days from the date of closing to think things through. In case you decide you don't want the deal, inform the loan officer in writing before the three days are over. In turn, the lending firm has twenty days to refund your fees.

3. Little equity can still qualify. As long as you do your homework and search for a lender who's willing to underwrite small equity, then you're still in. And there are market players out there who cater to borrowers with as low as 5% home equity. Be careful, though, because you might be saddled with higher mortgage insurance costs because of your low equity mortgage refinance loan. In order to determine if you qualify, you can call the firm to which you forward your payments monthly and find out who owns your loan. If yours is owned by Fannie Mae or Freddie Mac, then you have better chances of getting approved.

4. Be wary of FREE application costs. Anything free would seem like a really huge blessing, but keep in mind that in terms of mortgage refinance, free can come with a price. Instead of focusing on looking for applications offered at zero cost, focus on the interest rates and points. You may be in for the shock of your life when huge fees land at your feet right before closing.

5. Make intelligent comparisons of interest rates. You can do this by sticking to a constant number of points. Equate each point a .25 of 1% change in the interest rate. Your goal here is to work with a lender who offers the lowest interest rate. If numbers are too confusing for you, then ask around. There are always people who are willing to share their experiences with you.

Don't be lazy when it comes to your mortgage refinance. Keep in mind that you're doing this to save some money. It's like upgrading a car to a more efficient, cost-effective model, but you don't like to get ripped off while you're still in the process of securing for the best deal. So keep your wits about. Don't be afraid to ask questions, and don't sign or give in to anything before you're satisfied that what you're doing is in line with your overall goals.

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About Author

Both Sara Vlazny & Rony Walker are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Sara Vlazny has sinced written about articles on various topics from Finances. This article is brought to you by the experts at EFD Commercial Investments Inc. For more free information about , visit their. Sara Vlazny's top article generates over 3600 views. to your Favourites.

Rony Walker has sinced written about articles on various topics from Finances, Breast Cancer and Mortgage. Arrange for a the right way. Check out. Rony Walker's top article generates over 165000 views. to your Favourites.