Better rates for refinancing, but few can take advantage

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PHOENIX - It's been a figurative bloodbath since the Federal Reserve announced a new strategy to get the economy moving again. 

The Dow Jones plummeted nearly 700 points since the Central Bank announced Wednesday it would buy $400 billion worth of long-term US bonds.

It's a move intended to bring down already low interest rates even more. 

The hope is businesses would have an incentive to invest and Americans struggling to pay the mortgage might be able to refinance their homes. But that's just not happening in Arizona or anywhere in the country. 

If you are in the market to buy a house, rates may never be lower. 

For the last three years, people have been buckling down and lowering debt which means homeowners should be in the market for a refinanced loan, but they aren't.

“Everyone sees it,” said consumer finance expert, Dean Wegner.  “If you don't know someone affected by this recession I would be surprised.”

Wegner is in the mortgage business and says only about 5% of homeowners qualify right now because they owe more than their house is worth.

“Not only are you upside down but you're missing a once in a lifetime opportunity,” said Wegner.

Confidence is another huge issue to homeowners wondering if they will be next to lose their job.  Low interest rates aren’t enough to entice them.

But maybe you have lived in the house for ten years and your original loan was $250,000 at 6 percent.  That would make your payment about $1,749 with taxes. 

Refinancing at 4.1 percent at $200,000 would save you more than $600 per month.

You need to consider closing costs, although Wegner says you may not have to pay them. He reminded everyone different lenders can be more conservative, meaning it pays to shop around.

“If you get declined, pick up the phone and get a second opinion,” he said.  “It is definitely worth it.”

 While refinancing can save you on monthly payments, it is important to remember, it also resets the number of years until you pay off your home.

A number of you had specific questions about this subject.  Carrie Delucia Reynolds asked, "Can I still refinance if my house is worth less than what I owe?"

The answer is sometimes yes. There is a program called HARP backed by the government. It allows you to refinance 125 percent of your home's value.