Home Refinancing Rates - When is It Worth It to Refi?

When interest rates were two points below your current mortgage rate, it was considered a good rule of thumb to refinance. But with today’s low closing costs, a difference of one percent can save you money on your interest costs. Even with low fees, it only worth it to refinance when you can be sure you can recoup the mortgage costs.

Figuring Up Costs

Refinancing is simply paying off one loan and taking a new one. The same fees that you paid with the first mortgage, you will probably have to pay for the second mortgage. Usually, loan cost range between $2000 to $6000 for a $200,000 loan. You will also have to add in points for lower interest rates, adding additional thousands. The only way to recoup these costs is to keep your mortgage for several years.

Interest Rates

To make refinancing worth it financially, you need to be sure that interest rates are low enough to pay for the cost of refinancing. One simple way to figure this out is to use a mortgage interest calculator from one of the lending sites. These calculators will give you an estimated monthly payment and the total cost of the interest. By punching in different interest rates, you can see your potential savings.

Short Term

Besides interest rates, you also need to compare terms. The shorter the loan the less you will pay in interest. Ideally when you refinance, you should choose a loan with a shorter term. You can also choose a biweekly mortgage, where you pay half a mortgage payment every other week, which can reduce your loan by years.

Finding Low Cost Lenders

Not all lenders charge the same fees or interest rates, so you can save thousands by searching for lenders. You can easily go to the big name mortgage lenders and request quotes, but some smaller financing companies offer better deals. The easiest way to find them is through an online mortgage broker site. Basically, you enter some basic information about yourself and income, and then you receive several different quotes. From this list of offers, you can decide who is offering the best refi package.

To view our list of recommended mortgage refinance lenders online, visit this
page: Recommended Mortgage
Refinance Lenders Online.

Refinancing Your House Mortgage - Get a Fixed Rate with an Interest Only Option

In the last five years, the rate of homeowners refinancing their
mortgages have skyrocketed. The lessening in interest rates have resulted in
respective homeowners locking in a low rate. In improver to refinancing for a
lower fixed rate, some homeowners have got chosen to refinance their home
using an interest only option. While making interest only payments is
tempting, these types of loans have got certain risks.

What are Interest Only Mortgage Loans?

Interest only mortgage loans are rather new. With these loans,
homeowners have got the option of paying only the loan interest for a specified
period. Most interest only loans have got a term of five years. However, it is
possible to obtain a seven or 10 twelvemonth interest only option. At the end
of the interest only period, the homeowner must get making payments
toward the principal and interest. When this occurs, the mortgage
payment will increase.

Interest only payments are good because your monthly mortgage
payment is considerably less. If you dwell in a high lodging market, an
interest lone mortgage may be your only manner to attain homeownership. However, these loans are very dangerous. Once you get paying on the
principal, you can anticipate your mortgage payment to leap $300 to $500. If you
are not able to manage a higher payment, you are at hazard of losing your
home.

Combining Fixed Rate and Interest Only Refinancing

Fortunately, there is a manner to enjoy the predictability of a fixed
rate, and the financial comfortableness of interest only payments. Obtaining a
refinance loan with a fixed rate-interest only combo is easy. Refinance
lenders offer respective loan options to ran into your needs.

With a fixed rate-interest only option, homeowners have got the security of
a fixed rate 15 or 30 twelvemonth mortgage. These include predictable payments
that volition stay the same. However, if a homeowner needs extra cash for
an unexpected expense, they can use their interest only option, and
pay a lesser mortgage amount for a peculiar month. Paying a lower mortgage payment when money is tight volition aid you
keep a good standing with your creditor, and will not damage your credit
rating.

Four Quick Tips on How to Lower Your Mortgage Interest Rate

Lowering your mortgage interest rate

Are you buying a new home? I don't care if it's a condominium or a house, you will stop up disbursement a batch of money. For most people it's going to be the single largest business deal of their life. To maintain disbursals in check it is extremely of import to seek and secure the very best mortgage rate possible. There is a number of things you can make to lower your mortgage rate, and right now is an first-class clip because of the low interest rates.

Tip number 1 - allow lenders compete

Banks and mortgage brokers are in business to impart you money. If your credit record is in order and you have got a steady paycheck coming in you are a premier campaigner for a home loan, and banks will offer under each other to offer you a loan. The fast one is to allow them cognize you are an informed client looking for the very best interest rate, and that you are also looking at what other banks have got to offer. Don't just travel to your regular bank, store around!

Tip number two - get your interest rate offer in writing

Right, so you have got approached respective different banks to seek and secure a low interest rate for your new home loan. As soon as one of these financial establishments have got pre-screened you and are ready to offer you a loan, get them to set the interest rate they will widen to you in writing. With this interest rate locked in, you can now get back to all the other banks you are talking to and state them: "If you can't fit a 5.25% interest rate, we have got nil to speak about."

Tip number three - don't compare apples and pears

Remember that the interest rate you get is dependent on a number of things, but the chief factor is if you are shooting for a fixed or adjustable rate mortgage (FRM or ARM, as they are called for short). This is in fact 1 of the first determinations you have got to do about your mortgage. State you make up one's mind you are looking for a 3/1 ARM, being fixed at an initial low rate for the first three old age and adjusted each twelvemonth after that. That agency that is what you are going to utilize as a footing for comparison between different lenders. Don't get sidetracked by all the other adjustable mortgage rates or fixed rares on offer, they'll only get you mixed up.

Tip number four - travel for the adjustable rate mortgage

First of all, everyone have different needs and no 1 mortgage type will suit all. Some people really appreciate the security of knowing the exact amount of their mortgage payments for old age to come, and that agency fixed rate is the best pick for them. With that out of the way, what we're looking to happen here is the best manner to lower the interest rate on your mortgage. And that definitely intends adjustable rate. Adjustable rates mortgages are nearly always lower than fixed rates, just take a expression at what your local bank will offer you. Over the life of your mortgage that adds up to serious money, and personally I've always hated paying too much!

Mortgage Rates and Current Mortgage Rates

Current mortgage rates are at an all-time low providing homebuyers many loan options throughout the buyer friendly housing market. Present mortgage rates are very appealing to consumers looking to purchase their first home, move up the ladder to an upscale house, or refinance the present home. Current mortgage rates offered through many mortgage loan companies are highly competitive, offering consumers leverage while negotiating the best rates for their financial situation. Varying mortgage rates are found among the many mortgage loans that offer adjustable and fixed rate loans. It is possible to get extremely low mortgage rates today as a result of the continuing trend in low, current mortgage rates.

According to many financial specialists that closely watch mortgage rates and their fluctuating trends, it is not known how long the current mortgage rates will continue. If you are considering purchasing a home or refinancing your present home, the current mortgage rates could be the last, low rates you may see for some time. Of course, low mortgage rates are not the only consideration in determining the best mortgage for your circumstances. Your overall financial situation will also determine which of the current mortgage rates you choose within your loan package. Current mortgage rates affect an adjustable or fixed rate mortgage loan.

Your down payment amount plays a large role in determining which mortgage rates you are offered. Many consumers today are only able to put down 10% or even 5% of a house purchase price toward the down payment. This will automatically result in higher mortgage rates offered by your lending source regardless of the lower trend in current mortgage rates. A down payment of 20% or more will significantly affect your ability to secure low mortgage rates. Other factors affecting the best, current mortgage rates you qualify for, will be your credit history and your earning-to-debt ratio. Lending sources generally offer the best, current mortgage rates to those who have an impeccable credit report, large disparity between earnings and personal debt and the amount of down payment that is placed.

Lending sources offer the best mortgage rates to consumers with these credentials because the risk of default is very slim. However, many American homebuyers do not have a perfect financial history and lenders are expert in offering many loan options with differing mortgage rates. The current mortgage rates are definitely consumer friendly and it is to your best advantage to shop around the competitive lender market for the best loan package you can find. Many online sources offer free consultations to help you determine your best option. "For the Son of man is come to seek and to save that which was lost." (Luke 19:10)

Reasons to Refinance When Rates Are Moving Up

Interest rates have got enjoyed record lows during the last few old age allowing many people to refinance and enjoy lower mortgage payments. Now, interest rates are moving in the other direction. The average 30 twelvemonth fixed rate, according to mortgage giant, Freddie Mac, was 6.31% last week. Still, during this same period, refinancing accounted for 43.6% of mortgage applications.

Why would anyone refinance when rates are going up? With cash-out refinancing, you refinance your mortgage for more than than you owe and maintain the difference. Freddie Macintosh is predicting, by twelvemonth end, homeowners will convert $204 billion of home equity into cash, up from $142 billion in 2004.

1. Wage off home equity credit lines. The average rate for a HELOC (Home Equity Line of Credit) rose to 6.97% last week, up from 5.09% from a twelvemonth ago. Most HELOC loans have got variable rates that spell up when the Federal Soldier Modesty raises short term interest rates. Recently, the Federal Soldier Modesty announced its12th sequent rate addition and they sent out a strong message they will go on the short term interest rate increase. Using a refinance to pay off a HELOC not only will lower your existent HELOC interest rate, but you can halt distressing about the Federal …for your second mortgage at least.

2. Consolidate your mortgages. Unless you set 20% Oregon more than down feather on your home, there is a good opportunity you did a combination (or piggyback second mortgage) loan to avoid PMI (Private Mortgage Insurance) which is required on loans with less than a 20% down payment. Second mortgages typically carry higher interest rates and a cash-out refinance may allow you to consolidate these loans into one lower monthly payment.

3. Secure Type A Fixed Rate Mortgage. Rates for adjustable mortgages, which are sensitive to Federal moves, have got been rising faster than fixed rate mortgages. Borrowers with loans stopping point to a rate accommodation are facing an addition in monthly payments and the possibility of even higher rates down the road. Many borrowers who be after to remain in their homes are fending off the higher rates and possible hereafter additions by refinancing into fixed rate mortgages.

4. Better Your Home. Home Equity Lines of Credit and fixed rate second mortgage rates have got been rising. A cash-out refinance can turn out to be a cheaper manner to finance your home improvement, especially as the cost of the improvement increases. Properties refinanced during the 3rd one-fourth of 2005(?) proverb 23% grasp since the original loan was taken out. Improvements made after the refinance may lead to even greater increases.

While many people will no longer be interested in refinancing for a lower rate, there are many grounds to see refinancing even as interest rates increase. If you have got an existent second mortgage, need cash to consolidate credit card debt, or desire to make some home improvements, refinancing your current home mortgage may be the best financial move for you. For more than information regarding current rates, you can see our website at http://www.greenwoodloans.com/.