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08 Oct 09 Low Rates Driving Refinance Boom

More than 16 million homeowners owe more on their mortgage than their properties would be valued at.  To many distresses homeowners, mortgage refinancing represents lower loan payments and more money in their pockets. Many phone calls mortgage brokers received last week came from borrowers who couldn’t qualify for a refinance loan because of lower incomes, stricter credit standards or declining home values.  Les Berman of EB Financial said the new guidelines were designed to reduce the conflicts of interest for home appraisals but the stricter guidelines have hindered refinance loan approvals applications because appraisals are coming in too low.  The FHA streamline refinance requires at least six months of payments before a borrower can take advantage of the program, and verification of assets, job and income.

Mortgage brokers say a refinancing is worthwhile if you can shave off at least $100 from your monthly payment or get a full percentage point rate reduction.  That’s why mortgage rates below 5% are so appealing. Refinance rates hit a record low of 4.75% in the spring.

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