As I’ve said over and over since New Year’s day, mortgage rates are low! Down from 4.39% a year ago and currently holding at 3.8%, the Fed announced at their meeting last week that they were going to keep rates steady. Essentially this is to encourage growth in the housing market that we have yet to see, however, it’s a great opportunity for another market, and that’s the refinancers.
With a few minimums to meet, those homeowners currently paying over 4.5% with good credit and 20% equity are eligible to refinance. If you can shave half a point off, its worth investigating further.
Start out by talking to you existing lender, they don’t want to lose you, and already have all of your information, so they might be willing to cut you a deal! But don’t just settle for that first offer, compare it with at least two other lenders and be sure to include a credit union option.
If you refinance to a lower payment, you still might end up breaking even in the total cost of your home. Think about the bigger picture. If you need those lower payments now, it might be worth it to you. However, if you currently have a 30 year loan that you’ve paid into for x amount of years and you refinance to another 30 year loan, you’re adding on additional years of payments. Overall, you might just end up with the same cost. With the bigger picture in mind, you will probably end up saving more if you sign up for a shorter term loan. Mortgage rates just dropped in mid-January for 15 year loans. It might not make much of a difference in your monthly payments, but ultimately could save you tens of thousands of dollars by shaving off a few years of payments.