Refinance Mortgage Under Current Rates

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by: marciafreeman
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Word Count: 423
Date: Fri, 10 Apr 2009 Time: 5:31 PM
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As the tough economic times continue to weigh heavily on the country, consumers are seeking ways to reduce their monthly bills. Some simply want to save more money each month. And others who have lost their jobs or feel layoffs looming are trying to get by on less money. One of the easiest ways for home owners to cut monthly costs is to refinance. Mortgage bills are often the largest monthly cost for consumers. By undergoing a refinance, mortgage loan costs can be reduced significantly. Most people choose to refinance to save money on monthly payments. Many, however, refinance from a variable to fixed rate to achieve some financial predictability. Whatever the reason for a refinance, mortgage holders can currently benefit from some of the lowest rates the country has seen in decades. The second week of February, the average interest rate for a 30 year fixed rate mortgage hovered at 5.19 percent.
As the current rates offer a great opportunity to refinance, mortgage holders may decide now is the time. But not everyone may benefit from a refinance. You will need to do some basic math to find out if you should undergo a refinance. Your first step is to figure out the total of the actual refinancing. Things like title fees, closing costs, appraiser and lawyer fees will be added up here. Make sure you include any penalties for paying off your original mortgage and any bank fees you will have to pay to obtain the new mortgage. Next, determine what your estimated savings would be under the new interest rate. Simply take what your currently pay each month and subtract your estimated new payment. Now you know your costs and monthly savings. Thirdly, you will want to establish how much longer you anticipate owning your property to figure out if it makes financial sense to refinance. Mortgage holders do not generally benefit, for example, if they plan to sell the house shortly after they refinance. This is simply due to the fact that it takes a while to recoup the costs of the refinancing. This is referred to the time when you break even. Take your total cost and divide by the amount you anticipate saving each month, and that will tell you when you will break even after the refinance. Mortgage holders who plan to own their houses longer than the break even point are wise to consider refinancing. Those who plan to sell their houses before they reach that break even point, will likely not benefit from refinancing.

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Read more about mortgage loans, try www.getsmart.com/refinance.

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