December Update: Should You Refinance Now?


These days, if you have good credit, some cash on hand and are in the market for a new house, it’s like you’ve won the lottery.

True, there’s no ticket to scratch and nobody is taking your picture holding a seven-foot check, but the end result seems the same.

After all, you can get a great deal on a new mortgage, especially with the decision by Congress to extend the $8,000 new homebuyer’s tax credit.

According to the new legislation passed by Congress last month ...

  • First-time homebuyers who bought after Jan. 1 (original date of credit start) and close before April 1, 2010, still get the $8,000 tax credit. Don’t be surprised if that date is pushed back if the housing market continues to decline.
  • Current homeowners can get a new house with a $6,500 tax credit.

But what if you want to refinance? Is that a good deal these days, too?

In a word "yes." According to the BankingMyWay Weekly Mortgage Rate Tracker, mortgage rates fell to 4.9% from 4.97% last week.

With rates that low, lenders are almost begging qualified homeowners to refinance their mortgage loans.

If you go that route, make sure your credit score is good — preferably above 700, although anything higher than 660 may still get you a low rate. Also, have some decent cash on hand in the form of home equity (sorry, if your home is underwater, or heading in that direction, you likely won’t qualify for the lowest rates), these are the best days of your financial life.

When you do apply for a re-fi, also make sure you have the following ducks in a row:

  • Employment history. Be ready to demonstrate that you have a stable, full-time job. Lenders are growing hard shell these days, and they’ll only part with their money if you’re gainfully employed.
  • A clean credit report. Check your credit score and fix any problems — preferably at least one month before you refinance. The MainStreet Credit Center is a great place to monitor your credit situation.
  • Check for home equity. You can only get the best rates if you have at least 20% of home equity in your home. Having a lesser amount won’t necessarily disqualify you, but you won’t get the lowest rates with anything less than 20%.

Lastly, to find the absolutely lowest rates, go to BankingMyWay for help.

But don’t procrastinate. While rates below 5% are here right now, they won’t be with us forever. There’s no guarantee that economic policy makers in Washington won’t soon view the economy as truly on the mend, and raise interest rates to keep inflation check. When that happens, and sooner or later it will, you’ll look back at late 2009 as the days of wine and roses, mortgage-wise.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at

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