May 22, 2011

...AND WEALTHIER...:

Many homeowners are refinancing their mortgages to shorter terms: Borrowers who can afford the higher payments, and who meet lenders' tougher requirements, often opt to replace their 30-year mortgages with shorter-term loans at near-record low rates. (Kenneth R. Harney, May 22, 2011, LA Times)

Freddie Mac chief economist Frank Nothaft calls the shift to shorter terms "a very strong trend." In his company's latest quarterly survey of refinancers, more than 1 in 3 borrowers who ditched their 30-year fixed-rate loans opted to replace them with 15-year or 20-year mortgages at near-record low rates.

Among community banks and lending institutions that originate mortgages to retain for their own portfolios, the trend is toward even shorter maturities. Jeff Lipes, president of the Connecticut Mortgage Bankers Assn. and senior vice president of Family Choice Mortgage near Hartford, Conn., says some institutions are dangling fixed rates just under 3% to refinancers who want to compress their terms to as little as seven years and are willing to set up automatic payment withdrawal accounts.

"It can make a lot of sense if you can do it," he said — especially for baby boomers in their 50s who want to be mortgage-free by the time they hit retirement.


Posted by at May 22, 2011 8:52 AM
  

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