Home Again: The Ins And Outs Of Refinancing

September 26, 2012  |  

More and more Americans are looking to refinance their homes to take advantage of lower mortgage rates. Reuters reports on data from the Mortgage Bankers Association, “Applications for home mortgages dipped last week, though demand for refinancing rose as mortgage rates fell to a record low.” Applications for mortgage refinancing rose 81 percent.

But African Americans looking to refinance their homes may find they have more obstacles than white homeowners, states an article in the Charlotte Post. “Lenders consider credit score, timely payments, property values, and employment in mortgage refinancing. They also make it harder for blacks especially to swap out old loans to reduce their interest rate,” it says. The magazine bases these conclusions on a national study, “Paying More for the American Dream V,” and concludes, “Across the board, the new report finds that financial lenders have significantly decreased access to conventional refinance lending in communities of color, which bore the brunt of the subprime mortgage foreclosure crisis.”

Besides refinancing, African Americans start out as homeowners with more hurdles than average. In fact, many minority communities have been prone to foreclosures because of ridiculously high rates and outrageous conditions.

Considering all of this, black homeowners may find themselves prey to scam artists who are looking to benefit from their desperation. As we previously reported, “Through December 31, 2011, the Federal Bureau of Investigation (FBI) had more than 2,500 pending investigations into mortgage fraud around the country. Although the scope of losses for homeowners, legitimate businesses and to the economy caused by mortgage fraud are difficult to calculate, CoreLogic, a research and analytics company, has estimated that losses due to mortgage fraud in 2011 were $7.4 billion.”

If you do want to refinance, SmartMoney gives some tips. Among them:
•    Check the payoff. Even with a lower rate, a new mortgagee isn’t always the best move.
•    Consider time in the home. It’s not worth the closing costs or taxes if you’re only going to stay in the house for two more years.
•    Be mindful of debt reduction. Refinancing doesn’t get rid of debt it just restructures it.
•    Don’t go with a loan provider who solicits you. Homeowners should be weary of lenders who come knocking at their door.
SmartMoney also has an online Refinance Calculator to help you figure out your rates and odds. Refinance Calculator.
The Mortgage Professor offers a variety of calculators based on specific refinancing situations.

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