Is now a good time to refinance
Mortgage rates are currently low, actually they are really low, and there seems to be a rush by many homeowners to refinance. I'm not talking about cash out refinancing and once again using your home as an ATM machine but refinancing to save hundreds of dollars on your monthly payment.
Rates have been quoted lately at both 4.5% and 4.75% for a 30 year fixed rate mortgage so what would those rates mean to your monthly payment. I've put a little spreadsheet together and it will show you your monthly payment at various rates per $1000 financed. If your current mortgage is at 6% (which always was a very nice rate) and you refinanced with a new mortgage at 4.5%, you would save 93 cents per thousand dollars financed. While that may not sound like much, on a $200,000 mortgage, that adds up to $186 per month savings by reducing your payment from $1200 to $1014.
A couple of quick points. Please note that the above payment example does not include taxes and insurance which will likely stay the same as you are currently paying to your escrow account. The very best rates are available to those with excellent credit and some equity in their homes. Be prepared to be able to document your income.
If you have an ARM, now would be an excellent time to convert to fixed rate financing. And most interesting is that 30 year fixed rate loans are priced significantly lower than shorter term adjustable rate mortgages.
And don't be fooled by some of the outlandish advertisements that you see offering ridiculously low rates. In many cases, that rate and loan does not exist and the sole purpose is to get you to call. Use a reliable lender and if you don't know one, just ask me and I'll put you in touch with several to choose from.
Below is a chart and being very optimistic, I've also included rates as low as 4.25% and 4% because you just never know how low rates may go in today's economic environment.
