Tuesday, December 2, 2008

Time to Refinance?

Photo by woodleywonderworks

Exams have me sidelined recently, but I wanted to be sure to point out one very nice effect of the Fed's most recent efforts at loosening up lending markets. Mortgage rates have fallen precipitously in the past two weeks. My lender, JPMorgan Chase, is offering 5.25% today, though this lowest rate requires payment of a point. Even for no points, many qualified borrowers can likely reduce their interest rates and monthly payments substantially in this new mortgage climate. Caveat: "qualified borrower" is a much more restrictive term today than in recent years. High credit ratings, substantial equity (at least 80% LTV), and documentable income are back in vogue. Indeed, the W$J reported this morning that self-employed professionals, even those with substantial equity, liquid assets, and reported incomes are having a hard time obtaining loans due to difficulty in documenting their pre-income-tax-deduction incomes.

If you qualify, look into refinancing. At current rates, it may well be worth it.

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