Is a mortgage refinance right for you?
With rates for 30-year mortgages hovering below 4 percent since last October, all kinds of homeowners are trying to get their monthly mortgages reduced, say lenders and mortgage experts.
Along with months of record-breaking low interest rates, other factors are driving the refinancing boom: a competitive lending market and changes in some federal refinancing programs for struggling homeowners. It's prompted many established homeowners with old-school, high-interest mortgages to decide it's time to refi.
Making sense of the story
- To determine whether you
should refinance, look at how long you plan to be in your current home and
whether the upfront costs outweigh the monthly savings. Generally
the primary reasons for refinancing a mortgage are to:
- Lower monthly mortgage
payments.
- Eliminate the
unpredictability of an adjustable-rate mortgage by switching to a fixed
rate.
- Free up home equity cash
for home improvements, college costs or other expenses.
- Shorten the loan term, say
from a 30- to a 15-year mortgage, which can save thousands in interest
payments.
- It pays to compare quotes from several lenders
because they offer different rates and fees. Start with your current
lender or sit down with a local loan originator. You can also do refinance
comparisons online, using mortgage calculators at sites like Bankrate.com
or those of individual banks and lenders.
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