Are you struggling with the question should I refinance and want to avoid paying unnecessary lender fees? If you’re looking for advice from family, friends, or even your neighbors it’s worth noting that Fed Chairman Ben Bernanke recently jumped on the mortgage refinancing bandwagon. Here are several tips to help you answer the question should I refinance without overpaying at closing.
If you’re searching the Internet for financial advice before taking out a new home loan you can’t do better than the Chairman of the Federal Reserve. The reason you should care what Ben Bernanke does is that the Federal Reserve controls interest rates, not mortgage rates directly; however, because the Fed sets our economic monetary policy and Bernanke is in a unique position to understand where mortgage rates are going.
This could be why Federal Reserve Chairman Ben Bernanke has refinanced his home loan twice during the past 24 months.
The Wall Street Journal says Bernanke lives in a three bedroom, twenty one hundred square feet home with a $672,000 mortgage near Washington DC. The Federal Reserve has attempted to manipulate mortgage rates by shifting their holdings from short-term bonds to long-term bonds, which influence refinance mortgage rates. Because Bernanke recently refinanced his home he most likely believes interest rates will not dip below four percent where they’ve been holding for just over five weeks.
Another consideration to take when answering the question should I refinance is how long it will take to recoup your out-of-pocket expenses. Every home loan has closing costs that you’ll be required to pay unless you’re opting for one of those no fee refinance deals where you trade a higher interest rate for the lender paying your fees. The test of how good of a deal you’re getting when mortgage refinancing comes not from getting the lowest refinance rates, but how long it takes to break even recouping your closing costs. The more you pay at closing, including lender junk fees, the longer it takes to break even.
Considering that the average homeowner refinances every four years if you haven’t finished recouping lender fees you’re losing money no matter how attractive the mortgage rates. You can learn more about paying less for your next home loan by avoiding lender junk fees by checking out my free Underground Mortgage 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.
