Debate is circling about whether or not our Indianapolis real estate market is picking up. On the one hand, the Indiana Association of REALTORS® released a study that showed Indiana is still continuing to decline in home sales. On the other hand, Indianapolis REALTORS® working directly in the market are seeing signs that things are improving as there seem to be more buyers looking at Indianapolis homes for sale.
Even considering all the uncertainty, there are definitely some positive factors to consider in today’s current real estate market. One area in which to be optimistic is in the options to refinance your home.
Mortgage interest rates are reaching some near record level lows. If you are in a position of having significant equity already present, you might want to think about if now is the right time to refinance your home.
In conjunction with lower rates, the Federal Trade Commission also just implemented new policies about mortgage ad rate and
payment disclosure requirements. They are also setting updated rules about estimating closing costs so that they are clearer for consumers at the first of the year.
Many of these changes may be in part because of the crisis felt in the mortgage community due to the rate of foreclosures and subsequent loan modification scams. For the average homeowner not that severely affected at this point, now may be as good a time as any to take advantage of all the changes and low interest rates.
If you are thinking about whether or not to refinance your home, you may want to consider the following:
Low Interest Rates. Again, rates are reaching significant lows. At this time, 30-year-fixed-rates are falling to just above 5 percent, 15-year-fixed-rates around 4.5 percent and variable-rates getting close to 4 percent. Some borrowers with excellent credit scores are seeing even lower rates for refinancing.
Fixed vs. Variable. As a general rule, securing a fixed rate is still the best way to go, even though the variable rates are plummeting to such low levels that they are becoming very tempting. However, a variable-rate loan is still an option to consider if you are certain you will not be in your home that long or are able to pay off the principal in a short amount of time.
Comparison Shop. The internet has made any kind of comparison shopping much easier than for other generations. Do your homework and look for websites that offer information from many different lenders. After you have this information, compare it to what you can find from your current bank, other banks in the area, a national lender and mortgage broker.
Check Your Credit Score. One certainty in today’s market is that a good credit score goes a long way. This was always true but even more the case now. Lenders have become increasingly choosy about who they allow to borrow money from them. With the foreclosure crisis, that is understandable. So know your credit score and work to improve it if now is not the right time for your to refinance.
Know Your Payment Structure and Closing Costs. Various new rules protecting consumers will tighten the information you should receive about closing costs and your payment structure so that you are fully aware of what to expect. Be sure you understand this information.
Now may not be the right time to refinance your home but it is worth a little investigation to find out.