Refinancers Opt for Fixed-Rate Mortgages

Are you a current homeowner who is interested in refinancing? If you are, surely you have many questions regarding how to go about doing so and which loan one is right for you. While everyone's situations are different, we can tell you that in the second quarter of 2012 more than 95% of refinancing borrowers chose a fixed-rate mortgage. And of those people, 30% chose to reduce their loan term. This information comes from Freddie Mac's Quarterly Product Transition Report.

Borrowers who refinanced with HARP tended to take out a long-term, fixed-rate mortgage. These fixed mortgage rates are averaging at 3.79% interest for a 30-year loan, and 3.04% interest for a 15-year loan. If you are indeed interested in taking advantage of these low fixed-rates, you could get an even lower rate by also shortening your term. This will reduce your loan balance faster and help you build home equity sooner.

Give Quest Loans a call if you need help getting the refinancing process started! 1-888-883-5252. We would love to help!

Current Mortgage Rate Averages

• The 30-year fixed mortgage rate averaged at 3.66%, down from 3.71% last week. A year ago, it was at 4.50%
• The 15-year fixed mortgage rate averaged at 2.95%, down from 2.98% last week. A year ago, it was at 3.69%.
• The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.77%, down from 2.80 last week. A year ago, it was at 3.25%
• The one-year Treasury-indexed ARM averaged 2.74%, down from 2.78 percent last week. A year ago, it was 2.99%.

Looking to Refinance? Find the Best Loan for You!

When buying your first home, you will no doubt have plenty of questions. If you are not familiar with all of the terms, this can be somewhat tricky. You may wonder, "what kind of mortgage should I go with?" If you already own a home, you might be asking yourself if refinancing is right for you, and if so, what kind of loan should you go with and how long of a term?

We are not here to tell you what to do, but we can give you some statistics to help you make a decision.

In the fourth quarter of 2011, 95% of all refinanced loans were "fixed-rate mortgages" (FRM). An increasing number of current homeowners who are refinancing also opted to shorten their loan terms. 43% of borrowers who paided off a 30-year FRM chose to go with a 15- or 20-year loan.

The average fixed mortgage rates for that time period were 4% for a 30-year loan, and 3.3% for a 15-year. Since interest rates have been at historic lows recently, now is a good time to apply for a loan, or to refinance your current one. We have been seeing strong refinance activity into fixed-rate loans, and no doubt will continue to. If you have been considering refinancing your home, motivated by these low fixed-rates, you could actually obtain an even lower rate if you were to shorten your term as well. The interest rate on a 15-year FRM was on average about 0.7 percentage points lower than the 30-year FRM during the fourth quarter of 2011.

However, if you are only planning on staying in your home for a few more years, the hybrid adjustible-rate mortgage (ARM) may give you even greater interest rate savings. The initial interest rate on a 5/1 hybrid ARM was 1.1 percentage points lower than the 30-year fixed rate loan. 58% of borrowers who had a hybrid ARM switched over to a FRM instead but the remaining 42% did indeed refinance again with the hybrid ARM.

As you can see, there are many options. We encourage you to continue researching the different kinds of rates to find the best one for you. If we were to just consider the stats, though, the most dominant choice for refinancers continues to be the fixed rate loans. If you have any questions, feel free to contact us at 1-888-883-5252 and we will help you make the correct decision.