| Low Interest Rates Spur Mortgage Refinancing
Homes sales may get a boost when the fed's recent interest rate drop translates into mortgage rates. The cut will make it easier for many people to get into a new home and will also enable people to refinance to avoid future hardship. Several loan officers and mortgage lenders all say the same thing -- now is the time to refinance your home. But before you do, consumers need to understand the process is not cut and dry. Loan officers around the valley say more and more homeowners need to look into refinancing to take advantage of the low interest rate. Different loans can either lower your monthly payment or even shorter your term But it's not that simple. In order to refinance, you have to have decent credit and have some equity built up in your home.
Banks See Spike In Refinancing Applications
MADISON, Wis. -- Refinancing applications have surged 17 percent after interest rates dropped three-quarters of a point in the past week -- and they could go lower. VIDEO: Watch The Report But financial experts said it is important to know when it's best to refinance and if the type of loan a consumer has is even affected by this week's federal rate cut. Don Bertucci, AnchorBank's senior vice president of residential lending, said the last few days have been hectic. He said the phones have been ringing and the online applications have been coming in, all in response to this week's rate cut by the federal reserve. So, what does the 0.75 percent rate cut mean for residents? "It would affect mostly second mortgages or home equity lines of credit, where the rate is adjustable," Bertucci said.
Secured homeowner loans – An added advantage
Taking a loan against your home is a traditional and time-tested way of borrowing money. This is the only way that allows you to borrow large amount of money. Otherwise, lenders do not sanction a large amount. The equity that your home holds in the market is taken into consideration before sanctioning any loan. The maximum loan to equity ratio is usually 100 per cent. It means that if your home has a value of £250,000, you may get a loan of an equal amount. In the prevailing circumstances in the UK financial markets, lenders have been badly affected by the global credit crunch. Their cost of borrowing has increased and, therefore, the lending rates are also going in the upward direction. Many lenders have even withdrawn unsecured personal loans from the market. However, if you have a good credit history, you can easily get better interest rates on secured homeowner loans.
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