Rates at 4%?? Home Loan Refinancing Options

Yes – last week for one day rates were at 4%!

If you are thinking of refinancing you may want to get your paperwork in order, speak to a mortgage broker (check out my service partners for recommended brokers) and be ready to pounce if they drop again. And if they don’t – rates are low now anyway! Here is a bit more info on refinancing….

With a refinancing, you pay off an old loan on your home and take out a new one, typically at a lower mortgage interest rate. To refinance, you will generally need to have equity in your home, a good credit rating, and steady income. You can borrow a percentage of the equity to cover remodeling costs, debt consolidate, and college tuition.
You will incur all the closing costs that go along with getting a new mortgage when you refinance. So, unless you are doing extensive renovations and can get a mortgage interest rate at least two points below your current loan rate, you may want to select another financing option.

Many people flock to refinance while mortgage interest rates are low, particularly when rates are about two percentage points below their existing home loans. Other factors, like when to finance, will depend on how long you plan to hold on to your home and whether you have to pay considerable fees to refinance. How far along you are in paying off your current mortgage will also be a factor.

If you expect to sell your home relatively soon, you are not likely to recoup the costs you incurred to refinance. If you are more than halfway through paying your current mortgage, you probably will gain little by refinancing. However, if you are going to own your home for at least another five years, that is probably long enough to regain any refinancing costs and realize real savings as a result of lowering your monthly payment.