Is a Low Mortgage Rate Refinance Right For You?
On July 30, 2010 in Finance
With the lowest rates in 40 years, many homeowners are thinking of refinancing their loan. It pays to assess the rates and types of loans available for a low mortgage rate refinance. Compare the rates that are available online, and then contact a mortgage adviser for a complete review of your borrowing options and the mortgages available to fit your needs.
You’ll want to investigate whether a refinance is worth it for you. There are costs associated with restructuring your loan, so you will want to find out if the lower interest rate and monthly payment pay off over the life of the loan. If you have equity built up in your home, you may want to tap that for cash payout at a low rate. If you do not have equity, or are in a negative equity situation due to the depressed market, you won’t be able to do that. But, if you are planning to stay in your home for a few years, a refinance may be the right solution for you to lower your monthly payment, or pay more and get ahead.
You can begin doing your assessment of mortgages by visiting such sites as bankrate.com and eloan.com to determine what the rates are currently, and what banks are lending at those rates. Then consult a mortgage professional to discuss your options for refinance and about the types of loans for which you are qualified. Make sure you are aware of what you are getting into. Ask about the monthly payment and any associated fees as well as the interest rate. You will really want to calculate if a refinance saves you money over the life of the loan.
Lowering your monthly payment can be a real lifesaver if you are experiencing financial difficulty, or if the house is worth less now than you actually owe. Being able to pay less for your mortgage if you plan on staying in the home is always a good thing! You won’t see a reduction in principal, but you will be paying less in interest over the long haul.
You may also want to reduce the term of the loan from 30 years to 15 years. This will allow you to increase your equity more quickly, and pay much less interest. It means that your monthly payment is increased, but you will save a great deal of money over the long term.
If your financial position could benefit from a low mortgage loan refinance, now is an excellent time to take action.