Yesterday I read an interesting article on Yahoo Finance, “Mortgage Rates at New Lows, Thanks to Europe’s Debt Crisis.” We’re accustomed to hearing about low mortgage rates, but these rates have hit a new low!
How low are mortgage rates now? It has been reported that mortgage rates are at a 30 year low. Remember timing is everything because mortgage rates change.
If you’re in the process of buying a new home, then locking in these low rates is a good thing.
Existing homeowners may be able to refinance and save money. Depending on your current mortgage terms (e.g. interest rate), refinancing could reduce your payment and mortgage term. To determine if refinancing your home is the right answer for you:
- Compare your current interest rate with today’s mortgage rates. Bankrate.com is a great place to start. Call your current lender, bank, credit union or other lenders to get mortgage rate quotes. Be sure to ask about any additional fees (e.g. closing costs).
- Consider changing your current mortgage terms. For example, if you took out a 30-year mortgage in 1995, it is better to refinance with a 15-year or less mortgage. If you have an adjustable rate mortgage now, then taking advantage of the low fixed rate mortgage is ideal.
- Do your research. One example is using mortgage calculators to give you insight into the costs and potential savings. Refinance calculators can help you answer many questions: Where will you break even on the cost to refinance? How much will you save? Many websites offer refinance calculators. A few I’d recommend are:
- If your home value is less than what you owe, visit makinghomeaffordable.gov to find out if you qualify for the “Home Affordable Refinancing” program.
What has worked for you in deciding whether to refinance?