Refinance Mortgage Loans Now, or Later?
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by: marciafreeman
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Is it time to refinance? Mortgage rates are reaching record lows in June 2009. Jumping at the chance to exchange your current interest rate for a new low rate is tempting. Follow the steps below to determine whether the time is right for you to refinance.
* Get quotes from as wide a selection of legitimate lenders as possible. Select the ones with the lowest interest rates and total fees.
* With a mortgage calculator, work out your total savings from each offer, plus the likely monthly payment.
* Calculate the break even point. That is the date on which the savings you gain from a lower interest rate equal the amount you will spend up front on mortgage fees.
* How much longer do you plan to own the house? Refinancing is a good idea if the break even point falls before the date on which you plan to sell the house, since you will save money. However, you will lose money if the break even point falls after the date when you plan to resell, so you should not refinance. Mortgage fees are nothing to laugh at, coming to at least $2,000 to $3,000 for an average refinance. Mortgage refinancing at a lower interest rate is no bargain if you lose more to fees than you save on interest payments.
This method works whether you want to save money on your total mortgage payment, or whether you want to lower your monthly payment and do not mind paying more in the long run. If you want to lower your total mortgage payment via a refinance, mortgage break even points are important because they determine whether the real savings will be lower if you refinance. Mortgage break even points also tell you whether you would be better off reducing your monthly payment, or whether you would affect your wallet less by using the money you would have put toward refinancing fees to pay off part of your current mortgage instead. Otherwise, paying refinancing fees may be like throwing money down a hole.
Knowing when is the best time to refinance mortgage loans is key to succeeding in real estate. Its painfully easy and common to misjudge the timing or a refinance and lose several thousand dollars (or more) on the deal. Low interest rates often mean the time is right to refinance mortgage loans, but make certain the situation is ideal for you personally before you sign any agreements. Citation Home loan rates | Mortgage loan | Mortgage loans |
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