When mortgage interest rates fall at least one percent below your current mortgage interest rate, it might be time to check on a refinance. In today’s market, people who are refinancing are primarily in one of two groups. There are ways to refinance with no cost out-of-pocket, and / or without adding to your balance. There are trade-offs to everything, so it’s important to understand what your motivation is.
Everyone is trying to save every penny in this economy… and so for some homeowners, getting the absolute lowest mortgage payment is the most important motivating factor. This is especially true when families are concerned about a potential layoff. Some of the ways to minimize your mortgage payment might be:
- Refinancing to a lower rate
- Consolidating other balances into your mortgage (paying off $15,000 in credit card debt by increasing your balance could save you over $650 a MONTH!)
- Removing PMI by doing a 80-10-10 mortgage
- Checking your escrow account and in some cases not including the escrow in your monthly mortgage payment.
For other customers, the concern is reducing the principal balance as quickly as possible. Look at this example:
Purchased home in August 2007 with 30 year mortgage at 5.75% fixed rate
Refinance in August of 2010 with 20 year mortgage at 4.875% fixed rate
Difference in payment is $22 a month… cost to you is @ $6500 (added to the mortgage balance) and the SAVINGS going to a 20 year from a 30 year is a total of $166,883 in interest!
There are costs associated with refinancing your home. In order to get a “No Cost” refinance, you are either:
- Adding to your mortgage balance
- Getting a slightly higher rate so that the Lender is paying the closing costs
Those are the only options. We will be glad to calculate the best option for you! Please call Steve and Eleanor Thorne, Professional Mortgage Planners, 919-649-5058. We offer the Best Mortgage Rates in Raleigh and Cary NC
For information on VA Streamline Refinances click here
For information on FHA Non-Owner Occupied Refinance click here
For information on FHA Owner Occupied Streamline Refinance click here
For information on USDA Home Loan Refinances click here
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