Refinancing Frenzy

As the mortgage rates are dropping those that can refinance are. As we noted before the savings with these very low rates can make significant changes to peoples monthly bills. According to this article in the Dallas News titled As mortgage rates slide, applications to refinance have gone through the roof the surge in refinancing has been very significant. Lets take a look -

The lowest loan interest rates in more than a generation have prompted thousands of homeowners to refinance.

But so far, there hasn't been a similar uptick in purchases.

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No wonder applications to refinance homes have jumped more than 500 percent nationwide since October.

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The increase in home refinancings will be a boost to the U.S. economy, said veteran housing industry analyst David Berson of PMI Group.

"This will allow some people to increase their spending, which is not a bad thing for the economy," Berson said.

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Unlike previous markets, not everyone will be able to take advantage of the mortgage rates – even if they go lower. Lenders are more demanding than they've been in years.

"Applications don't mean people will be qualified," Berson said.

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For homeowners who decide to refinance, advisers point out that home values have declined in some neighborhoods, which could make it harder to obtain a new loan.

As noted in the article, people may be applying but that does not mean that the mortgages are going through. All the underwaters will be turned away. Anyone who had a hit on their credit score will be turned away. Out of a job - turned away. While the applications are piling up the pool of qualified applicants is declining.

Our recommendation - apply, apply, apply. Get your paperwork in order first. Know what you have, your scores, and what you owe (and to whom). If it can save you $100, $200 or even $500 a month it is well worth it!