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Refinancing Now Possible as Homes Regain Equity and Mortgage Rates Remain Low

Millions of homeowners with negative equity missed a chance to refinance but might be able to refinance in 2014. CoreLogic reported 312,000 returned to positive equity in the first quarter of 2014, bringing the total number of mortgaged residential properties that have equity to more than 43 million.

Of the 43 million homes with equity, approximately 10 million have less than 20 percent equity. You will be hard pressed to find a lender that will refinance your mortgage if you have less than 20 percent equity. If you're part of the 33 million homeowners that have 20 percent or more equity in your home, you're in a good position to refinance. Although the record low refinance rates we saw last year are a thing of the past rates, are still low historically speaking.

30 year refinance rates hit a record average low of 3.27 percent early in 2013 and are currently averaging 4.19 percent. There are lenders still quoting 30 year refinance rates below 4.19 percent and below 4.00 percent. Checking around, we see the lowest 30 year refi rates on conforming loans are at 3.625 percent with 2 mortgage points and at 3.99 percent with no points.

In order for a refinance to make financial sense, you need to plan to be in the home long enough to recoup the refinance costs. Another factor to consider is what mortgage rate you have on your current loan and where mortgage rates are today. Refinancing to the same loan term makes financial sense if today's rates are at least 1.00 percent lower than your current loan rate.

Refinancing to a shorter term loan, say to a 15 year loan from a 30 year loan, will save you even more money. The savings in mortgage interest payments can add up to hundreds of thousands of dollars depending on the principal amount borrowed. You can use a mortgage calculator to compare the total interest payments over the life of a loan.

Current Mortgage Rates Today

Mortgage rates today on 15 year loans are averaging 3.24 percent, up slightly from last week's average 15 year mortgage rate of 3.18 percent. There are plenty of lenders still quoting 15 year refinance rates below 3.00 percent. Checking on rates, we see the lowest 15 year refinance rates are at 2.75 percent with just over 1 mortgage point.

Today's mortgage rates on 30 year jumbo loans are averaging 4.62 percent, up slightly from last week's average 30 year jumbo mortgage rate of 4.57 percent. The lowest 30 year jumbo refinance rates available are well below the average rate. Checking on 30 year jumbo rates in the state of California, we see the lowest rate is at 3.875 percent with 2 mortgage points.

Current mortgage rates on 15 year jumbo loans are averaging 4.09 percent, an increase from last week's average 15 year jumbo rate of 4.01 percent. The best 15 year jumbo refinance rates available are well below 4.00 percent at 3.125 percent with about 1.5 mortgage points. The lowest 15 year jumbo rates without points are also below the average at 3.50 percent.
Author: Brian McKay
June 12th, 2014