Is mortgage refinancing a doable solution now days?

Yes and No, well, it depends. Interest rates are at it’s lowest in decades and even though you might feel the urge to refinance your loan to get a better deal, you might not qualify for it. Banks went from practically lending money to anyone who asked to not lending money at all or becoming extremely tight with their lending practices. This, obviously is due to the weak economy we are now facing, unemployment is at it’s highest in decades, according to the United States Department of Labor the unemployment rate in June 2010 was at 9.5 %.

So, banks have more than enough reasons to become cheap with their money, they have also become more strict with the FICO scores they would like you to have when asking for a mortgage loan or to refinance your existing one. To make it attractive the FED which is the Federal Reserve (the central banking system of the United States) is trying to keep the interest rates down.
According to Freddie Mac, a corporation sponsored by the Federal Government to provide second market residential mortgages, interest rates are historically low.

The following statement was provided by Frank Nothaft, Vice President and Chief Economist for Freddie Mac and it was published on freddiemac.com: “Fixed-rate mortgages continued to hover at 50-year lows, thereby supporting homebuyer affordability and refinance activity. Over the past month, about four out of five conventional loan applications and more than one-half of FHA and VA loan applications were for refinance. Compared to the recent peak in 30-year fixed interest rates 13 months ago (week of June 11, 2009), current rates are a full percentage point lower. With today’s rates, homebuyers would save about $1,500 in payments each year on a $200,000 loan compared to rates last June.”

And what are today’s rates? well, let’s pretend you want to refinance your current loan to a 30 yr. fixed, according to freddiemac.com as of July 15, 2010, you can get an interest rate of 4.57%, pretty good, no? If you want to be a little bit more aggressive and would like a 15 yr. fixed, the rate now is 4.07%
Now, why is it becoming so difficult to do a mortgage refinancing? We mentioned that the FED is doing it’s part to keep interests low, right? but we also mentioned that the banks are becoming more strict with their lending guidelines and that includes the FICO score. If before this recession and while the real estate boom they were careless with the FICO scores, they are now very cautious with the same matter, just like when they were lending money “left and right” and then they went to no lending at all, it’s the same scenario: Credit didn’t matter, now good credit is a MUST!
To answer our original question: Is mortgage refinancing a doable solution now days? the answer is YES IT IT, under the right circumstances. Believe it or not, the majority of people in the United States still have a good credit standing, if this is your case, YES you can refinance, and because you have been responsible with your finances you might get the royal treatment, you just need to be careful and choose wisely who you give your money to.