In the beginning of the year, statistics show that 6 out of 10 loan applications were for refinancing. That was when the mortgage rates were well under 6% and borrowers were refinancing their loans to save some money.



Lately, mortgage rates have gone up to 6.2% for an average 30-year fixed mortgage from 5.6%, in February. Even though rates have gone up, it is still at a historical low and people still have a good chance of refinancing their loans to save money. If you look at the way the rates are fluctuating up and down in the market to try to fix the mortgage mess , there are predictions that things are yet to get worst and rates are going to get higher. It would make sense if you had an adjustable rate loan or a jumbo loan that will set this year to refinance as soon as possible because as the rates go up and standards change it will be harder to get a better loan.





Adjustable-Rate Mortgage Loans



Experts are predicting an inflation and this will be more damaging with the ARMs loans. Even though with all the rate cuts, it is not a big jump of the reset ARMs loan from an average of 4.5% to 6% but with inflation, be prepared for a possible higher jump to 7% next year. Usually, it would make more sense to refinance your loan from a higher interest rate to a lower interest rate to shorten your loan term or lower the monthly payments. Now with the current market environment, it would be morebeneficial to swap from an adjustable to a fixed refinance loan. At least you will have the security knowing your monthly mortgage payments will be more predictable and remain the same.



Jumbo Mortgage Loans



Jumbo loans are larger loans that are normally over $417,000 to $730,000 and a percentage point higher than the conforming loans. Now there with government efforts to help the economy, to freeze the higher rates for jumbo loans. This will save some money for borrowers. Understand that with the rise in refinancing application, this does not mean that a good majority of these loans were closed and funded.



The underwriting standards are a little tougher now due to the amount of faulty loans and foreclosures. Loans were being funded to borrowers that should have not been approved in the first place and now are affecting the economy. So these borrowers that are trying to refinance and keep the mortgage payments down, can not because they do not have enough equity or have a good credit score. There is not enough equity because the house values are falling. If you qualify for a refi on a home loan, you should not wait for more rate cuts because this does not necessary mean that the mortgage rate will follow. Credit standards could change and rates may rise, which will make it harder to refinance later.