Falling Mortgage Rates give New Meaning to Refinancing

October 07 00:00 2011

New York, October 7 (RainbowNewsLine.com) – Mortgage rates are tumbling, bringing good news to home owners who are trying to capitalize on record-low or near record-low rates by refinancing their loans. No sooner that a home owner refinances his loan, another mortgage rate drop tempts him to go through the refinancing process once again. Through this process, refinancing is being redefined with some new market trends and realities.

When the threshold for refinancing was actually 4.5 percent, everyone believed that 4 percent would be the great psychological breaking point for people to refinance their 30-year, fixed-rate loans. Greg McBride, a senior financial analyst for Bankrate.com said that “the threshold actually was 4.5 percent because that enabled a lot of borrowers to save at least one half of one percentage point.”

House owners are finding 15-year, fixed-rate loans very attractive because their motive has changed to getting the home paid off and strengthening their finances as no one is going to do it for them. Some mortgage rates are now hovering around 3 percent.

Lastly, people have realized that the same rules apply whether you are paying 5 percent for your loan or you are paying 4 percent. Home prices have fallen as is evident from the fact that in the Chicago area, home prices fell 10.4 percent from a year ago but in the city of Chicago it was down 3.8 percent.