Funny I should see a piece on CNN Money And Finance recently that just because mortgage interest rates are hovering right around 5.9% and could go even lower that anyone would think about the refinance residential mortgage mindset right now.
I guess it would all depend on how long you have had your current loan and what type of terms you have on that loan that would qualify your thinking on a refinance option.
Interest rates have been at about the current levels for nearly 18 months but if some analysts are correct, now may be a good time to consider making a move if it is possible.
Of course, it all has to make sense. By using a mortgage interest calculator, like the one we have here on our site, you need to make sure that the cost and maintenance of your new loan is more beneficial to your pocket book than your current loan.
Most new loans will come with fees so you need to figure out how long it will actually be before you recoup those costs.
Other area’s you need to pay attention to are costs related to things your new lender may require. Things such as title searches, current appraisals, any type of needed inspections, mortgage insurance and any “other” type of processing fees. Sometimes the deck can be loaded on these loans.
Remember an old refinancing golden rule. If when adding up all the fees and costs associated with your new loan and figuring in how much you are saving each month on the new loan, you should be able to recover those cost with your new savings in 7 years or less. If not, steer clear!
My experience has shown that the recoup time figure should be more close to 5 years or it’s a bad deal. Again, there are many factors but if you should need to move anytime within 5 years or less you will actually lose money on the new deal.
Of course, if you are in an ever escalating mortgage because of the terms of your current loan, then by all means refinancing is something you must consider.
Due to the loss of home values over the last 12 months in many area’s of the country anything but a fixed monthly rate can truly be eating your wallet alive. It could be several years before home values regain enough equity to justify any type of high interest type of loans.
Only careful and accurate information you dig up on current mortgage interest rates and the use of an accurate mortgage interest calculator will give you the information you need to make the most informed and wise decision on how to structure your own home mortgage.
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