Mortgage refinances tend to be more simple than purchase loans. Since 1990, refinances have also become more commonplace.
During the 1970s and 1980s, mortgage interest rates tended to be very high. During much of the period, home buyers had to settle for double-digit rates on their mortgage financing. This was due to the fight against high inflation being conducted by the Federal Reserve. By increasing market rates, the Federal Reserve slowed economic growth and inflation.
By 1992, as inflation was brought under control, interest rates started to drop. Homeowners who had purchased the property a few years before could lower their mortgage rates to 7.00% on a 30-year fixed-rate. Since then, rates have continued to fluctuate within a range of 5.500% to 9.000% for conforming 30-year fixed-rate loans.
It has now become common practice among home buyers to take future refinances into consideration when buying a home. During periods of relatively higher interest rates, home buyers now often select ARM loans. ARMs have lower initial rates; and most home buyers figure wisely that they can always refinance to a long-term fixed-rate loan when interest rates have cycled back down to more attractive levels.
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If you are getting ready to purchase your first home or if you think you can't afford to purchase your first home, don't make another move until you have read this important information! Every year, Federal, State and Local government and community development programs help thousands of people obtain there first home.