Historically Low Interest Rates
There are several reasons for a recent spike in Mortgage Refinancing. First, interest rates on refinances are extremely low. Several years ago, refinancing your home at an interest rate lower than 4.5% meant buying down the rate using the points system. Now it is not uncommon to find interest rates in the 3.5% range without any points. It is, however, unclear how long interest rates will stay as low as they are now.
New FHA Streamline Refinance Requirements
In addition to historically low interest rates, FHA has "Streamlined" its refinancing requirements to allow for quick and easy home refinancing. In many cases, a homeowner who has made his or her payments on time for the past three months can refinance a home (1) without paying for a new appraisal, (2) without having to have their credit checked, (3) without providing proof of income (or even employment), and (4)can be upside down on their mortgage. In many cases, closing cost are relatively low and can be financed. The reasoning behind the new FHA Streamline Refinance requirments is that if a homeowner can make their payment at 6%, they will be able to make it at 3.5%. If you currently have a mortgage in excess of 4%, it might be a good idea to check into refinancing before interest rates go up.