How to Refinance a Home Mortgage During a Recession

A recession is marked by a slow down in the growth of the nation's economy. Typically during a recession unemployment goes up and consumer spending slows down. In an attempt to spur the sluggish economy, the Federal Government lowers interest rates. When interest rates drop below the rate you are paying on your current mortgage, you should consider refinancing your home mortgage loan.

Difficulty: Moderately Easy

Instructions

1. Monitor mortgage loan rates so you know what rates are being offered and how these rates compare to the one you are currently paying.

2. Talk to a mortgage lender to determine how much closing costs are for a refinance. Understand that closing costs vary somewhat from lender to lender, but this gives you a general idea of how much you can expect to pay.

3. Think about how long you intend to keep your home. Calculate the savings each month with the lower mortgage rate, and determine how many years you need to hold the home to recover your closing costs, and begin to realize a profit from the lower interest rate. If you intend to keep the home longer than the amount of time needed to recover the closing costs, a mortgage refinance is a good idea.

4. Shop around for the best interest rate available to you on a mortgage refinance. The interest rate offered varies from one lender to the next. When soliciting rate quotes from lenders, be sure they also give you a list of all fees they charge on the loan. Compare fees in addition to rates.

5. Secure a fixed rate home mortgage loan instead of a variable one. With a fixed rate mortgage, your interest rate stays the same when the recession ends and rates begin climbing.

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on 7/13/2009 There are some great programs to use during these troubled times. There is a program called DU Refi Plus by Fannie Mae. Your loan must be owned by Fannie Mae to qualify. There is a FHA or VA streamline refinance program. They do not require appraisals, income or asset verification.