Refinance?
MikeyJ asked:
I have heard that mortgage rates are really low right now. Does that mean that it would be a good idea to refinance my mortgage in order to get a lower rate? How do I do the math to figure out if it would be worth it or not? Are there any hidden costs or fees in a refinance?
Reginald
I have heard that mortgage rates are really low right now. Does that mean that it would be a good idea to refinance my mortgage in order to get a lower rate? How do I do the math to figure out if it would be worth it or not? Are there any hidden costs or fees in a refinance?
Reginald
Tags: Math, Mortgage Rates, Refinance My Mortgage
December 5th, 2008 at 12:28 pm
Yes, if you have a fixed rate now around 6% or so, they may charge you HUGE closing fees that would make up the difference if they gave you a 4% rate. I would only do it if you have great credit and/or and adjustable rate mortgage. Yes there are hidden fees which differ from lender to lender. Go with a reputable one.
December 7th, 2008 at 8:12 am
You don’t mention the rate you’re currently paying.
If there is more than a 1% difference in rate, you probably want to talk to your local bank mortgage representative about refinancing IF you are planning to stay in the home at least another 5 years. That time goes down if you can get a 2% reduction in interest and is almost always a good idea.
Rates are VERY low right now if you have a good credit history and sufficient income and sufficient equity in your property.
A couple comments on how to determine if you’re getting a good deal.
1. Shop at least 3 local bank or credit union mortgage lenders.
2. Compare apples with apples. Be sure you’re getting the same exact amount of a loan from each of the 3 offers and that they’re all talking about the same exact number of months in the contract. At that point you can compare the exact payments between each and the exact amount of fees involved from each. Go with the best deal.
3. Stay away from the online mortgage places and stay away from mortgage brokers. Stick with your local banker or credit union rep. They’re living in your community and will likely be there in the future if you need further help. Relationships matter.
Good luck and hope this helps!!
December 10th, 2008 at 11:58 am
If you have a 30 year fixed rate loan and you’re half way there, you paid about 70% of the interest. If it’s fairly new and have a good rate, you can always pay down the mortgage in order to reduce the interest. Request an amortization from your mortgage co so you’ll know exactly what the interest/principle is.
December 11th, 2008 at 1:46 am
Actually they can’t hide any fees. They have to be declared on the Truth in Lending Statement. I just locked in my rate to refinance my home. I bought my home in 2005 I had a 30yr fixed rate @ 6.625% I am currently locked in a 15yr @ 4.625% granted I bought it down a point. But closing costs will vary depending on the value of your home. Higher value home, higher closing costs. Typically you can expect anywhere from $1000 -$1200 in closing costs plus any prepaid items like interest between payments, escrowed taxes and insurance, and/or $300 for an apprasial.
Every point you buy is 1% of your loan value up to 5 points
so on a 200,000 loan 1 point is $2000 that will give you about .25% better interest rate depending on the situation.
Essentially you want to move your loan at least 1% to make it worth it at any time. and .75% if you have been in the house more than 5 years with out refinancing.
Sorry to tell you the best time to lock in rates was wednesday morning on the 23rd. Hopefully you locked already.
Personally I went through a mortgage broker, just because if you go to a bank you’re getting retail rates, if you go to a broker you’re getting wholesale rates.
December 14th, 2008 at 1:29 pm
The best thing to do is to find a loan calculator. You can put in how much you want to borrow, ad at what interest rate to figure out your payments. If you owe less than the house is worth you can also harvest equity out. So if you have a higher interest rate, you could refinance lower, for more money (that goes into your pocket), and keep the same payments.
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