Los Angeles Times Points to High Demand For Refinancing Loans

The L.A. Times writer E. Scott Reckard observes, “Refi madness is smoking hot.” While likely not the type of detached MBA-speak preferred by mortgage banking professionals, the sentiment is definitely true. In Reckard’s article titled, “Mortgage refinances surge to highest level since April 2009”, he writes, “Reacting to record low mortgage rates, borrowers seeking to lower their monthly payments signed up for lower-cost replacement loans last week in numbers not seen in 3½ years.”

Interest rates have been “plummeting thanks to a new Federal Reserve program designed to stimulate housing and the economy by purchasing mortgage-backed securities” according to the article. With this and other online newspapers reporting housing market recovery news, low interest rates and other positive indicators, all signs point homeowners looking to refinance towards the lender.

Are You Ready To Refinance?

If you are contemplating a home loan refinance on your California property, there are a few questions to ask. Knowing the type of refinancing loan you’re after is a big part of the preparation process; your credit rating, debt-to-income ratio and other factors are always important but play a bigger role in credit-qualifying refinances such as cash-out refi loans. VA and FHA streamline refinances may not require a credit check as a baseline, but your lender may still ask for one. How does your credit stack up? Don’t forget that a lender may consider two or three FICO scores, choosing the lower one or possibly defaulting to the lowest number as a measurement of your current credit.

When Did You Last Apply For Credit?

It’s best to avoid applying for new credit before filling out refinancing loan paperwork. Don’t forget that a credit query can reduce your FICO score (however short-term that reduction may be) by a few points; debt-to-income concerns aside, borrowers who may be close to a lender’s minimum FICO requirements for cash out refinance loans should be especially careful about the timing of a refinance loan application after having applied for a new credit card or other line of credit.

How’s Your Budget?

Some types of refinance loans can lower your monthly payments, but some borrowers choose to include fees or add-ons to the loan amount. Do you know how much your mortgage payments may increase by doing so? Is it more cost effective to pay these expenses up front rather than include them in your loan? Those are calculations definitely worth doing before you commit to exploring a refinance loan.

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