If you’ve been procrastinating on mortgage refinancing even though interest rates are at their lowest levels of the year, now is the time to get a new home loan. Finding the best refinance rates for your next home loan isn’t hard; avoiding unnecessary markup and junk fees on the other hand, is a little trickier. According to Tim Manni at HSH.com, mortgage refi applications are at all time highs.
It’s always puzzling why more mortgage borrowers don’t fill out loan applications when mortgage rates are historically low and still falling. In this current low-rate environment, there are, however, the usual suspects that keep borrowers on the sidelines:
http://blog.hsh.com/index.php/2011/05/refinancers-jumping-on-low-mortgage-rates/
How can you tell if mortgage refinancing is a good idea in your situation? You can quickly crunch the numbers to see if refinancing makes sense by determining how long it will take to recoup your closing costs. Simply add up all the fees you’ll be paying including the mortgage origination fee and divide this figure by the amount you’ll be saving each month.
Suppose for instance your closing costs total $3,300 and your new payment is a $100 lower. It will take you $3,300/$100 = 33 months = 2.7 years to recoup your expenses. If this amount of time is acceptable to you then you’ll probably want to lock in your mortgage rate because it’s not likely interest rates will stay this low for long.
On a side note you can shorten the amount of time it takes to recoup your closing costs by avoiding unnecessary markup and junk fees. The most common mortgage mistakes people make on their mortgage refi is paying lender junk fees. You can learn more about avoiding common mortgage mistakes by checking out my free Underground Mortgage Refinancing Videos.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
