If you're still waiting to refinance, now may the time to snag the best deals. Not only are mortgage rates at near-30-year lows, but applications for refinances are down, prompting some banks to seek ways to encourage homeowners to get off the fence.
The Wall Street Journal reports that many smaller and regional banks are kicking out incentives to bring in new business, especially for larger, jumbo mortgages because they're seeking banking relationships with high-net-worth individuals. Some banks are slashing fees or allowing borrowers to roll some of the fees into the mortgage instead of paying upfront. Others are offering 60-day rate locks at no additional charge.
While the banks may be marketing to only the most favorable borrowers, they're setting a high bar for the majority of homeowners who haven't already refinanced. To get the best rates, a credit score of 740 or higher is required to refinance, along with documentation that includes two years of tax returns and proof of income and assets. Homeowners have to have at least 10 percent equity in their home, and if it's less than 19 percent, they are required to have mortgage insurance.
For borrowers who are underwater on their mortgages and don't meet the banks' standards, the latest, more relaxed version of HARP, or Home Affordable Refinance Program, is designed to help. However, not everyone will benefit: While the program does reduce fees and eliminate the loan-to-value cap on fixed-rate mortgages, your mortgage has to be with Fannie Mae or Freddie Mac, and you can't have a delinquent payment in the past 12 months.
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