home is likely the largest investment you will make in
your lifetime, and the interest you pay on your home
mortgage over the years could more than double the
purchase price. Yet a new study by Bankrate.com reveals
that just over one-third of borrowers arenít sure what
interest rate they are paying on their loan.
you donít know could be costing you a lot of money.
Current mortgage rates now near their historic lows.
Bankrateís survey finds average 30-year fixed rate is
at 3.80 percent. They note that if you refinance a
$200,000 loan from 6 percent down to 3.8 percent, you
would save $267 per month in mortgage payments!
here are five important things to know about refinancing
Figure out whether a refinance is worth doing. It pays
to refi if you can get a rate that is as little as 0.5
percent to 1.0 percentage point lower than your current
rate, depending on the size of your mortgage balance.
Consider all costs and fees. The costs and fees for
refinancing may be paid by your mortgage banker, but a
"no-fee refi" means youíll pay a slightly
higher interest rate. Alternatively, the costs can be
rolled into the loan balance, or you can pay them
separately. One tip: If you pay fees separately, it
should not take more than 12 months to make your costs
back through a lower monthly payment.
Start by knowing the facts of your current mortgage.
Look at your current mortgage statement. It will show
you your current rate, your current payment, and your
current loan balance. Thatís what a lender needs to
give you a quote. Start by asking your current lender
for rates, but also check out lenders including
GuaranteedRate.com or QuickenLoans.com for a quote.
Get the current market value of your home. Ask a local
broker who knows the area. Or go to Trulia.com,
HomeValues.com or Chase Bankís home value estimator
When you know the current market value of your home, you
can figure out your percentage of equity, compared to
Check out federal programs to help you refinance ó
even if your home is "underwater," meaning
your mortgage is greater than the value of your home.
Only loans owned by Freddie Mac or Fannie Mae, and have
not been refinanced since May 31, 2009 are eligible for
the HARP/HAMP refi programs. And you must not have had
any late mortgage payments within the past 12 months.
final thought: When refinancing, think twice about
stretching out your mortgage over many more years,
adding to your ultimate interest bill. If youíve been
paying on your loan for seven or eight years, consider
refinancing to a 15 year loan. The rate will be even
lower, though the monthly payment wonít drop as much.
But if you plan to live in your home for a while, you
will have the possibility of being mortgage-free by
retirement ó a very secure feeling. And thatís The