Refinancing Your House Can Save Oodles of Money

Refinancing Your House Can Save Oodles of Money

(Rochester, N.Y.) Howard Haims is a financial planner. After advising many clients to refinance their mortgages, he took the plunge himself. "We were very fortunate to lock in at a rate under 5 percent. The day it dropped, she locked us in,” he said.

Haims originally bought his home two and a half years ago, but he locked in the new rate a-point- and-a-half lower, saving $350 a month.

"There's plenty of money around Rochester. The rates are low; it’s a great time to refinance," said Chris Stevens of Premium Mortgage.

You could easily consider a refinancing if you answer “Yes” to one of more of these four questions.

1- Is my interest rate over 6 percent?
2- Do I plan to stay in my home for more than a few years?
3- Is it time to trade my adjustable rate to lock in a low fixed rate?
4- Do I want to cash out the equity in my home to consolidate other debt?

The combination of lower interest rates and bailout money to banks appears to be working to stimulate the economy.

In just one week, refinancing applications surged 42 percent. What’s different this time is that now banks are doing more to scrutinize potential customers.

Haims said, "This time we need to see tax returns, investment statements…do a full credit check. The pendulum has really swung…in just two years."

Those who want that 5 percent rate should check their credit score. Two years ago, a credit score of 620 made the cut. Now anyone below 740 will likely pay a new fee--$750 for every 100,000 borrowed.

Some people may have better luck with a smaller, regional bank.

"Our people know the local market,” said Christopher Spaker of Canandaigua National Bank. “If something doesn't quite fit, we can make an exception based on certain scenarios and a common sense approach."

Larger national banks have created standards based on what's happening across the country, in markets where housing values haven't been as stable as they are in Rochester.

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