You can still refinance loans

HOUSTON So much of the financial reporting has been negative, but for those who have good payment histories, now is a good time to refinance your home loan. Doing so can save you thousands over the life of your home loan.

As a general contractor, Aaron Christiansen can put together a building with little trouble, but his home loan had him worrying.

"We were in an adjustable rate mortgage that was coming up on the two years and it was going to go up even more," Christiansen said.

Fearing an increase in his payments, Christiansen hoped to refinance, and was surprised to find he qualified.

"I thought there was no way we would get it, but we did," he said.

It may seem unlikely, but mortgage brokers say they are seeing a flood of homeowners looking to refinance and the loans are getting approved.

"A refinance is considered a safer loan, and the reason why is you are already in the mortgage pipeline so you have already proven in some fashion you are financially responsible with a mortgage payment," said Steven Kaufman of Zeus Mortgage.

Kaufman says current homeowners can refinance a home with very low closing costs, depending on the amount of equity built up in a home.

"In most cases you are looking at $300 max out of pocket," Kaufman said.

The reason refinancing makes sense now can be found in the interest rates. Right now a 15 year home loan is available for 5.18% and a 30 year home loan can be had for 5.38%.

"I have not quoted 5.38 on a 30 year loan since about 2003," Baker said.

Kathy Baker with Baker Mortgage says homeowners will need a credit score of 680 to get the best rates, and good payment history.

"The people that are going to have difficulty refinancing are those who are behind on the current payments," Baker said. "They can still do a modification with their current lender, but not only is refinancing a good thing to do but in many situations people are getting out of ARM loans."

That's what happened with Aaron Christiansen.

"We refinanced, set up the escrow and we are saving probably about $300 a month," Christiansen said.

If you've been in your home for more than ten years, you may be able to shorten the length of the loan, cut the interest rate and end up with a smaller payment all at the same time.

Call your bank or mortgage broker, they can run the numbers for you to see if it makes sense. I'm told rates could go even lower next year.

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