Predicted Mortgage Rates For Next Year, 2010

With all the hoopla regarding mortgages and mortgage refinancing this year, you are likely wondering, as a homeowner, if you should consider refinancing your own mortgage, and what the predicted mortgage rates will be for the coming year. Refinancing your mortgage during times of low interest is a great way to literally save thousands of dollars on your home mortgage over the coming years. But determining if refinancing is your best option is difficult. First of all, you must be able to qualify for refinancing, and not all homeowners will. For those who need to reduce the amount of their monthly payments, refinancing may not be needed – you may in fact do better by modifying your mortgage instead.

How To Determine If You Should Refinance

Determining whether or not to refinance your existing mortgage is a complex problem for most people. If you have a subprime mortgage, you should more than likely refinance, assuming that you have used the time that you have been paying on your mortgage as a window of opportunity to clear up any credit issues that caused you to take out a subprime mortgage in the first place. Most subprime mortgages are characterized by their unconventional interest rates, which are much higher than the normal interest rate at the time the mortgage is written. The reason that the interest is so elevated for these types of mortgages is to offset and minimize the risk that is involved for the lender who writes them.

With a subprime mortgage, the interest rate is often a mixed rate, which means that the first couple of years are written at a fixed rate of interest that is predictable, and then the interest rate adjusts in later years to a fully indexed rate that is based on the credit score and income of the borrower.

Many subprime mortgages required no down payment or a very low down payment, with as much as ninety percent of the value of the home being finances in most cases; other subprime mortgages financed the entire amount of the loan. If your mortgage was initiated under these circumstances, then chances are that you have a subprime mortgage on your hands, and that you should attempt to refinance or at least modify the terms of the mortgage as soon as possible.

Predictions For 2010 Mortgage Rates

Mortgages rates have literally been all over the place in 2009, and have gone up recently. Homeowners that are eligible to refinance or modify their mortgage loan should take an opportunity to do just that. Mortgage rates for a thirty-year fixed loan are around 5% right now and slightly higher in some areas. The average mortgage rate in the earlier half of the year was around 4.7% on this type of mortgage. The 2010 mortgage rates, or rates for late 2009 should decrease somewhat.

The overwhelming number of homeowners who refinanced earlier in 2009 to around 4.7% caused an increase in paperwork for lenders, and interest rates jumped back up to around the 5% mark in most places. Even at 5%, homeowners who are paying more, such as 9% or even higher, should consider taking out a refinance now on their mortgage loan. For those homeowners with subprime mortgages, looking into mortgage refinance to a fixed predictable rate is ideal, especially if their mortgages have adjusted to a new rate that has caused their payments to balloon out of control.