The mortgage rates are at an all-time low, around 4.x%. If you have a mortgage rate of 5.75% or higher, and plan to stay in your home for at least 3 more years, it's time to look into refinancing. It will lower your monthly payment and lower the amount to pay off the mortgage. You do need a good credit score to qualify, at least 720. If so, call your bank and get more info. FYI: "ARM" - adjustable rate mortgages have lower rates to start, but are very risky. They will go up, maybe a lot. Stick with fixed. 
Monday, August 16, 2010
Time to Refinance that Mortgage?
The mortgage rates are at an all-time low, around 4.x%. If you have a mortgage rate of 5.75% or higher, and plan to stay in your home for at least 3 more years, it's time to look into refinancing. It will lower your monthly payment and lower the amount to pay off the mortgage. You do need a good credit score to qualify, at least 720. If so, call your bank and get more info. FYI: "ARM" - adjustable rate mortgages have lower rates to start, but are very risky. They will go up, maybe a lot. Stick with fixed. 
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The ARM rates do not automatically go up. They go down as well. That would adjust at the end of the term of the ARM. Most also have a stipulation that the payment will only change by a certain amount based on the interest rate and not cause sticker shock.
If you plan on being in your home for three years and take a three or five year ARM, you have a lower interest rate, saving more money. A ten year ARM works for some too. It is a unique situation for every household and consumer.
Please research, check your options and plan ahead.
One can add an extra $50 a month with a ARM rate and pay down the principal, giving a higher amount of payback at selling time.
Also, loans amortize daily so by paying 15 days early, the end will show more principal has been paid off by earlier payments.
Do not pay for a fixed rate unless you are absolutely NOT moving, EVER.
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