Are you a candidate for Refinancing?

Mortgage interest rates have dropped to their lowest point in 20 months, with 30 year fixed rates hovering around 6%.  Several options exist under which homeowners should consider refinancing.

Those who currently are overpaying on their mortgages-particularly if they bought their homes in the spring or summer of 1999 or during the spring of 2000 and are still paying interest rates between 8 and 8.5 percent.  Additionally, homeowners who took out a one-year ARM (adjustable rate mortgage) a year ago or a 3-1 hybrid ARM several years back are now facing rates in the mid 8% range but can improve upon that significantly by refinancing .  Lastly, homeowners with property that has appreciated and need some cash to pay down credit card bills can refinance and draw on their equity.

Refinancing is also a good idea for homeowners who borrowed jumbo loans in the past.  Fannie Mae and Freddie Mac have increased the limit on conforming loans from $252,700 to $275,000, so homeowners with loans below this amount can save money by refinancing into a conforming loan.  Lastly, those homeowners who have paid down their loans to 78 percent of the value of their home no longer have to pay mortgage insurance and can save $$25 to $150 a month simply by canceling that coverage.  Refinancing can lower the homeowner's mortgage rate and allow the insurance to be eliminated all at the same time.