Do you want to learn how to find the best Baltimore refinance rates? Well, in many cases it is as straightforward as being willing to put in your homework. Different banks and lenders have different criteria for giving great Baltimore mortgage rates so it can certainly pay off to shop around. Use the free Baltimore MD refinance rate finder at the top of the page to compare rates easily.
Baltimore Foreclosure Statistics
The entire country is in chaos over the amount of homes that have gone into foreclosure within the past year. As of he national average of homes foreclosed in the United States is one in every 355 homes; and last month alone 360,149 homes were foreclosed on across the US.
So, how does Baltimore compare? Well, the state average of foreclosures in Maryland is one in every 250 homes, much higher than the national average. Baltimore alone had 822 foreclosures in August of 2009 (82% higher than August last year). According to Maryland’s Department of Housing and Community Development, they do not see this trend decreasing. Instead, there is real concern about 2011 when 70% of Baltimore homes that have ARM rates are going to adjust up and they feel that more homes will be foreclosed on at that time.
While the unemployment rate in Baltimore is not as bad as it is in other states, it is still an unhealthy 7.5%, which is 4% higher than the same time last year. With the unemployment rate growing, studies now show that one in every eight homeowners are considering bankruptcy and are not considering any other avenues to try to save their homes. Accordingly, one in eight families were late on their mortgage payments in August 2009 as well, a 60% jump from August 2008. Where do you fall in these statistics; are you among those struggling to pay your mortgage payment as well?
A Baltimore Refinance May Help You
There has been a lot of talk about banks modifying loans to help homeowners in trouble. However, there are not many homeowners that benefitted from this service. Why? Most banks have a very complex system that can be hard for an average person to comply with.
There are companies that help individuals get a loan modification, however they charge up front fees and if the homeowner is in a situation where they cannot pay their mortgage, they most likely cannot pay the fees either.
Banks are fickle about modifying loans as well. In most cases, individuals who use loan modification never catch up on their loans. So it does not benefit the bank to offer a lower interest rate on the existing loan or to allow the homeowner to continually make later and later payments. This is not to say that all banks refuse to modify mortgages, it is just not the easiest process to go through.
Refinancing a loan lets you take advantage of the equity in your home, so most banks are willing to refinance if they see that you can afford a lower monthly payment. Here is an example to help you understand exactly how refinancing works. You have an initial loan of 300,000 over 30 years at 7.5% making your monthly payments roughly $2,300 a month with taxes and insurance. You have been paying on your home for 15 years and have a balance of 226,281 left on your loan. Therefore, you get a new 30-year mortgage for the balance, but you take advantage of the lowest interest rates ever and get a rate of 5%, now your monthly payment is a more manageable, $1,500 a month with taxes and insurance. Now you are saving $800 a month and taking quite a load off of your mind as well.
Perhaps you are wondering why a bank would allow a refinance but not a modification. Again, the modification process is a tricky one and many people simply do not get it right. What’s more, the bank is benefitting greatly by your refinance. You had 15 years left on your loan and now you have added another 15 years to it. As long as you are able to pay those more manageable payments, they are making a healthy profit off of the deal. Even though you are paying more than you would have if you could have continued at your previous rate, you are now in a position where you will not lose your home and you will not have to worry about ruining your credit by having your home go into foreclosure, making it a win, win situation.
Deciding Whether to Use the Baltimore Refinance Option
Now you need to decide if refinancing your Baltimore loan is the right decision. The truth is, only you can really decide that. Consider the points below to help you decide if refinancing is a good choice for you at this time.
Firstly, how much equity do you have in your home? If you have only had your home for one to five years then it is not likely that a refinance is going to do you much good unless you can negotiate a deal for a much lower interest rate. For example, the difference between a loan of $100,000 at an 8% interest rate and a 5% interest rate is $200 a month. If you can get a three-point rate difference and $200 a month will make the difference in whether or not you can afford your loan, then you should consider it. In addition, if you have an ARM and the interest rate increase has made your loan unaffordable, then you should refinance that right away as well.
The second thing that you should consider is whether you should use a broker or your bank to refinance your loan. Your bank has a relationship with you, however they only have one product to sell, theirs. If you use a broker, you can have him or her check various banks for the best rates. Of course, you also have the option of checking for yourself online by using a quote tool that allows you to compare the rates yourself and skip the intermediary and the fees associated with using a broker.
Finally, need to understand the different types of loans available. Only then can you determine which type of loan is likely to save you the most money through these tough times. Those options are explained below.
Types of Baltimore Mortgage Refinance Options
As with your original loan, you have three options for refinancing your loan. They are adjustable rate mortgages (ARM loans), fixed rate loans and balloon payment loans. About the balloon payment loans, unless you plan to receive a windfall soon, it is not likely that a balloon payment is right for you. Although the interest rates are low and your monthly payments will be reasonable, the balance of the loan will come due in seven to ten years and there is no guarantee that you will be able to renegotiate that loan at that time.
ARM loans are the reason that so many people are in trouble right now. Attracted by super low interest rates, people purchased homes that they could not quite afford because the monthly payment was affordable. However, in the one or two years (depending on their agreement) when the rate was adjusted, unfortunately, they were adjusted up, and those individuals could no longer afford their monthly payments. This does not mean that ARM loans are the worst kinds of loans; on the contrary, they can be very beneficial and save you thousands of dollars over the years. However, they are meant for those individuals who can afford a much higher interest rate (typically calculate up to 8%, if you cannot afford your payment at that rate then this loan is not for you).
A fixed rate mortgage generally offers you the best option if you are in trouble. You get the same interest rate and payment no matter what the market is doing and no matter how good or bad the economy gets. It offers you some stability and the ability to budget in the long term. You will also always know what you will have to pay each month for your mortgage payment.
Compare Baltimore Refinance Rates Online
If you are serious about refinancing your home, and you can do this whether you are in financial trouble or not, then you should start looking for the best interest rates available and the best terms you can get for your loan. Use a free online tool to start the process, talk your bank or a broker, or whatever you need to do to get the ball rolling. Enter your zip above to get started finding the best Baltimore refinance rates today!
