Colorado Ripe for Refinancing

By Kelly Richardson
Local Lender Columnist
Jan 10, 2007
Colorado residents looking for the right time for mortgage refinancing may not be waiting any longer. Falling interest rates on fixed mortgages are providing homeowners and investors with lots of opportunities to improve their situations. But now is a time to be wary of the adjustable rate mortgage.

As is the case with real estate markets across the country, the recent housing boom is beginning to cool down. But that shouldn't keep you from recognizing the signs of favorable refinancing opportunities. The Denver Post reports a variety of factors that signal the time is right for refinancing your mortgage. Spotting them and understanding their significance is the key to saving money.

Refinancing Indicators

• Rising Activity. One indicator of a positive refinancing period is a rise in real estate activity. With applications for new mortgages jumping 3.7 percent in a single week, now might be the perfect time to act.
• Fed Friendly. Despite the slowing of the Colorado real estate market, federal interest rates have actually begun to decline.
• Fixed Mortgage Rates. The interest rates of fixed mortgages are significantly lower than their adjustable rate counterparts, bucking the trends of the past decade.

So what's the trouble with adjustable rate mortgage loans? The simple fact is that many homeowners with them seem to be running for cover. Foreclosures are rampant in a market that has been dominated by ARMs.

ARMs Not so Attractive

• Narrowing Comparison. There's no longer much of a gap between fixed rates and the initial rates on ARMs (which are supposed to be lower than a fixed-rate but will rise over time).
• In the Numbers. The average monthly payment on a typical ARM in the state of Colorado started at about $1,200 in early 2004, but is now nearly $2,000.

The bottom line for Colorado residents is that, while there are lots of mortgage refinancing options, sticking with the surety of a fixed-rate mortgage is preferable to the gamble of an adjustable-rate one.

Sources
ARMs lose legs
Falling rates opening doors for new mortgage seekers

About the Author
Kelly Richardson has over 15 years of creative and technical writing experience. He teaches secondary Honors-level English and writes ad copy for a variety of clients in specialized industries such as medicine and technology. Kelly holds Undergraduate and Graduate degrees in English and Education from Georgia State University. He is currently pursuing a Doctorate in Educational Policy & Leadership from Berne University & International Graduate School.