With interest rates still hanging at record lows, homeowners around the nation have been looking into refinancing their mortgages.  Even here in the Metro-Detroit area people are saying goodbye to their “jumbo” loans and are now working with a Michigan mortgage lender to refinance into a more conventional loan.

Sure that homeowner might have to write a decent size check when the mortgage closes, but at the end of the day they are significantly reducing their monthly payment which improves their overall cash flow.

I can’t imagine a single homeowner that wouldn’t be happy to lock their mortgage in at a MUCH lower rate – it’s an opportunity that no Michigan homeowner should miss out on.

The Problem with Jumbo Mortgages

These “Jumbo” Mortgages often exceed a half-million dollars and are in higher-cost areas where housing expense is above the national average.  At one time, these homes were likely extremely expensive but reduction in housing values have brought property values below what is owed on the jumbo mortgage.

Unlike conforming mortgages, these jumbo loans do not meet specific guidelines of Fannie Mae and Freddie Mac who repurchase loans and resell them to investors.  Because the lender assumes a greater risk, interest rates on these types of loans are much higher than a conforming loan.

In the current market, the spread between a convention and non-conventional mortgage is around.5 percent.  If the mortgage was acquired before the financial crisis in 2008 then the spread is likely closely to 1.8 percent or more

In order to make this kind of refinance work, most borrowers have to have a significant amount of money to bring the mortgage balance down below the threshold of a jumbo loan.  While it’s a lot to foot, it’s a sound investment.

Cash-in refinancing has remained popular as homeowners work to cut their debt levels. Some 23 percent of homeowners refinancing in the second quarter decreased their mortgage balances, according to Freddie Mac; in the fourth quarter of last year it was 47 percent.

A Solution for Cash Strapped Homeowners with Mortgage Trouble

You don’t have to have a jumbo mortgage in order to qualify for a refinance.  Countless homeowners in our state work with Michigan mortgage lenders like Ross Mortgage to bring their payments to a reasonable point.  With a smart refinance at current rates, you could ultimately save yourself thousands of dollars each month.

If you’re still paying higher interest rates, then talk to a mortgage banker today.  You could very well lock in a refinance with current interest rates and strengthen your overall financial position.  Who doesn’t want a few extra thousand a year in their pocket?