Wanting To Refinance?

Have you been thinking about refinancing your current mortgage? Well if you have not you might want to think about doing so. Interest rates are reaching an all time low. Now, more then ever, is the time to refinance your current mortgage, especially if you are in a variable loan.

It's good to take not of financial trends. On average rates follow a five year changing period. They start lower, start to climb up, and then come back down. Well this is now the down climb so the next step of for rates to go back up again. Make sure that you grab a good rate while you can.

How to know if refinancing is right for you. The first thing you want to do is check your rate, you should be able to see what your rate is on your mortgage statement. Next what is your minimum monthly mortgage payment? Make sure when you are comparing payment amounts that you just look at your principal and interest payment amount, and if included your private mortgage insurance. You should never included the amount you pay for taxes and insurance when comparing mortgage payments because these two payment amounts will be the same no matter what bank you choose to use for a refinance. Now that you know what your payment and your interest rate is you are ready to shop.






When rate shopping you do not want to apply at every bank to find out a good comparison. Ask the bank for a Good Faith Estimate. This estimate will allow you to see what the interest rate is, what the payment would be like, what type of loan program you are applying for, and what your closing costs are going to be. Always pay attention to the Annual Percentage Rate (APR) this is the true cost of the loan. One bank may offer you an interest rate of 5% but an APR of 7% this means you are going to pay about 2% in closing costs in order to get the rate at 5%.

How to know which company is offering the best option.

Here's an exmaple to help you compare products.

Bank ABC is offering: 5.25% with an APR of 6%
Closing costs = $2000
Payment = $500

Bank 123 is offering: 5.00% with an APR of 6%
Closing Costs = $3500
Payment = $475

BankUSA is offering: 5.50% with an APR of 5.75%
Closing Costs = $500
Payment = $525

Which one of these is the best deal? How do you compare?

First you can get the lowest payment with Bank 123, a total of $50 less then BankUSA and $25 less then Bank ABC, but how much are you paying for your rate of %5.00? You are paying up to $3000 more for Bank 123 then BankUSA. What you need to do is find out your break even point. Sense you are paying $3000 more for an interest rate of 5.00% and a payment that is $50 less you need to devide $3000 by the $50 a month difference. This equals 60, this means that it will take 60 payments with Bank 123 to save enough to equal the $3000 extra you had to pay. The average person refinances their home every 5 years so in this example you would be better off going with BankUSA and paying $50 a month because you will be saving $3000 and chances are you will refinance again before five years is up, the point where you would actually be saving money if you refinances with Bank 123.








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