Mortgage Rates Lower Helps Refinance Rates?

Since October of 2008 mortgage rates have been on a steady decline.  The reason that rates are declining is because the government is attempting to make it alluring to purchase a house once again.  If you are only paying 4.5% interest on a house you are much more likely to make the leap into home buying.  If rates were in the eight or nine percent range, it is likely that many people that considered buying a house would not even consider it.

On the other hand, low rates also help with the refinance market.  When current home owners see that they can refinance their mortgage for a rate much lower than the one they are currently paying, there is often a refi boom.  Many market analysts called for a refi boom in 2009 but it has yet to happen.  Even though mortgage rates are at a 30 year low, many borrowers cannot get through the refinance appraisal step of the process.  Home values have been shredded in the last two years and many home owners do not know what the true value of their home is.

If you have not gotten an appraisal in the last 30 to 60 days, there is a good chance that your home value may be lower than what you expect; sometimes much lower.  The best thing to do is to get an valid appraisal before you fill out the refinance application so you know how much equity you have in your home.  If you do this, you are much more likely to get a refinance rate you are happy with.