Advice for refinancers

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Mortgage rates fell this week, keeping a refinancing boomlet alive. The benchmark 30-year fixed-rate mortgage fell 10 basis points, to 5.78 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.36 discount and origination points. One year ago, the mortgage index was 6.31 percent; four weeks ago, it was 5.88 percent.The benchmark 15-year fixed-rate mortgage fell 7 basis points, to 5.31 percent. The benchmark 5/1 adjustable-rate mortgage fell 15 basis points, to 5.51 percent. The benchmark 30-year jumbo, for home loans greater than $417,000, fell 6 basis points, to 6.97 percent.The rate on the 30-year fixed has remained below 6 percent for more than a month now. Many homeowners applied a few weeks ago to refinance their mortgages, but latecomers continue to apply. According to the Mortgage Bankers Association, refinances accounted for almost 70 percent of applications last week, and brokers report a fresh round of inquiries this week.Advice for refinancersAll this is happening while lenders are tightening credit standards, and while home prices in many markets are falling. As a result, landing a refinance can be tricky. Jim Sahnger, mortgage consultant with Palm Beach Financial Network in Stuart, Fla., dispenses some advice:Be ready to document your income, debts and assets. "If your loan officer asks for a specific piece of information, provide it as quickly as you can," Sahnger says. A lot of people are preparing their taxes these days, he adds, so financial information is easily found.Know your credit score. Sahnger recommends that homeowners get a good sense of their creditworthiness before they contact a broker or loan officer to refinance. One method is to buy a copy of one's credit score at myFICO.com.Have a realistic idea about how much your house is worth. This is the toughest piece of advice to heed. Houses in many markets have lost value in the last two years. That's especially bad news for people who bought houses within the last three years or so, because many of these homeowners now owe more than their homes are worth.Sahnger has dealt with clients recently who owe $30,000 or more than their houses are now worth. If they want to refinance, they will have to bring checks to the closing table. They will have to pay the current lender what they owe, and then they'll have to give a down payment to the new lender. Few lenders will lend 100 percent of a home's current value in declining markets.Don't expect a loan officer or broker to quote you a rate without asking you about your credit profile, how much you owe and how much you think the house is worth, and whether you can document your finances, Sahnger says. No one can give you an accurate quote without that information, and the process will roll more smoothly and more quickly if you can provide that information promptly.More recession evidenceRates fell this week in response to a dismal report of weakness in the service sector, the biggest sector of the economy. The Institute of Supply Management's non-manufacturing index for January collapsed to 41.9 percent from the previous month's 54.4 percent. A number less than 50 percent means that the service sector is shrinking.Weekly national mortgage surveyResults of Bankrate.com's Feb. 6, 2008, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:30-year fixed 15-year fixed 5-year ARMThis week's rate: 5.78 percent 5.31 percent 5.51 percentChange from last week: -0.10 -0.07 -0.15Monthly payment: $966.04 $1,331.61 $937.89Change from last week: -$10.52 -$6.09 -$15.59(Distributed by Scripps Howard News Service. E-mail Holden Lewis at hlewis(at)bankrate.com)