How Do You Know If Refinancing Is Right For You?

By Dan Bewley, The News On 6

TULSA, OK -- It may be time to take a second look at your mortgage.  Interest rates on 30 year loans are at their lowest levels in nearly four decades.  How do you know if refinancing is right for you?

Analysts say Green Country has dodged the sagging real estate market that has plagued the rest of the country; still the Federal Reserve has pledged to pour money into the mortgage market in an effort to pump life into the U.S. housing market.  Lenders say the plan appears to be working.

"Oh, this is a fantastic time. This is a fantastic time to refinance or buy," said Arvest mortgage loan officer Leslie McNamara.

Leslie McNamara has been a loan officer with Arvest Bank for 10 years.  She says she's never seen a better time to give your mortgage a once-over.  The average rate on 30-year fixed-rate mortgages dropped this week to just above 5%, the lowest it's been since the late 1960's.

McNamara says some borrowers are worried about coming up with a large down payment, but she says 3.5% down and a stable credit score is usually all that's needed.

"The very best terms available are for credit scores above 720, 740 somewhere in there because there are so many adjustments that we take into account," said Arvest mortgage loan officer Leslie McNamara.

So, how do you know if you should look to refinance your loan or stick with what you have? McNamara says it's good to follow this rule of thumb. Only refinance if you can lower your interest rate by at least 1% and lower your monthly payment by at least $100.

"Less than that, no. You have to incur all the costs again anytime you redo real estate," said Arvest mortgage loan officer Leslie McNamara.

The key, lenders say, is to strike while the rates are hot...it's hard to predict how long it will last.

"If you were always thinking of refinancing, buying, do it. Don't delay, you might miss out because, more than ever, the only trend out there is volatility," said Arvest mortgage loan officer Leslie McNamara.

The rates started falling after the Fed began buying up to $600 billion of mortgage-related securities and other debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.