CH-CH-CH-Changes... Why You Might Want To Refinance Now!

Big changes are expected in the mortgage market fortomorrow that you would qualify for today. And now
2008. With rates so low, now is a good time to weighlenders will have to pull your credit to actually give you
your refinance options.....a hard and fast quote. If you have a good idea of
Have you been reading the papers or listening to thewhat your credit score is, you can compare lender's
news lately? (Ok, I guess you have been because youquotes more effectively. But if you haven't a clue as to
are reading THIS paper. Just call me Master of thewhat your credit score is, a lender will have to know it
Obvious). Rates are low. Actually, rates are really quitein order to be on target with a quote.
low. You may be considering refinancing in the nextAnd there's more. Although pundits say the rates will
couple of months. Maybe you need equity from yourstay low (and no, I'm not a pundit), another cost will be
home but you're hesitant to touch that great rate youpassed on to the consumer that will begin to be
got a couple of years ago. Or, maybe you're sure yourealized by many lenders very shortly. As a result of
want to refinance but are waiting for the latest newsrecent increases in foreclosure rates, Fannie Mae has
from the "Fed" before you take the plunge. Well, theredecided to increase its margin in order to maintain
are a few reasons why you may want to take actionadequate capital reserves for federal regulators. And
sooner than later.Freddie Mac is expected to follow suit, although the
Fannie Mae and Freddie Mac, the major lendingannouncement is not official as of the date I am writing
institutions for non-government loans, have recentlythis column. It may be official by the time you are
announced that they will move to risk based pricing inreading it. Even if rates remain stable through the
the new year. What is risk based pricing and why doupcoming period, increased margins mean higher
you care? This announcement means that loans witheffective rates to consumers. Thus, if you are mildly
higher risk characteristics will receive a higher rate. Inconsidering a refinance for whatever reason, you
the recent past, risk based pricing was typicallyshould really decide now if it's right for you. Waiting too
reserved for non-conforming loans, or loans that werelong could cost you money.
outside conventional guidelines. In 2008, you can expectOf course, refinancing has to make sense. You need
to see risk based pricing passed on to conformingto consult with a reputable mortgage lender who can
loans. What constitutes a higher risk? First andhelp you analyze your options and choose what's right
foremost is your credit score. If your loan to value isfor you. You need to weigh the savings against the
greater than 70% - your rather healthy credit score ofclosing costs and also take into consideration how the
680 won't get you the same rate that your neighbor'srefinance may or may not benefit you. But, don't drag
720 credit score will get him. Same goes for youryour feet. Do your homework. Get your ducks in a
sister and her 620 credit score. Her mortgage rate willrow. And finally, the risk based pricing and all that other
be much higher than yours. Fannie and Freddie willstuff I discussed will also apply to new home
assess tiered "hits" or cost increases to borrowerspurchases (but not select first time homebuyer
based upon their credit scores. That could make aprograms- they remain the same). Whatever type of
huge difference in the rate you will be quoted inmortgage you are considering, now is the time to
December and the rate you would be quoted nextinvestigate before the changes occur.
year. It may also mean you might not qualify for a loan