REFINANCING YOUR MORTGAGE
Interest rates are down, and that means that you could get more your for your money by refinancing your mortgage. If you are looking to save some money and considering refinancing, THAT MONEY SHOW and guest Keith Gumbinger, Vice President of HSH Associates, have some tips for you.
To hear Keith's exact words, click on the video clip to the right. Below is a summary of Keith's tips.
Some things to consider before you decide to refinance:
1. Low rates equal opportunity. With interest rates steadily declining over the last eight months and dropping sharply over the last two months, there may be better options than your current mortgage. Refinancing may help you reduce your monthly payments, get out of a mortgage plan that isn't right for you anymore, and allow you to save money over the long term.
2. With rates as they are, you may not have to wait for the popular 2 percent rule, which says that you must get a rate that is 2 percent below what you are currently paying. This is not always true. Waiting for this can cost you money, especially if you can get a half or one percent lower rate for free. For free? That's right. It's a buyers market, and right now some lenders are willing to absorb refinancing fees while offering a slightly higher interest rate than you would have if you paid the fees up front. This means that you can still save without any out-of pocket expenses.
3. Refinancing is not right for everyone. If you have lived in the same home for a long period of time such as ten years, extending your mortgage for another 15 or 30 years may cost you more money in the long run. However, if this is not the case, and you want to cut your monthly payments, be little more flexible, or save a few dollars, then you may be in luck.
And, once you have decided:
1. Set some goals for yourself, and decide why you are refinancing. Do you want to increase your cash flow? Do you want to pay off your mortgage sooner? Or, do you want to get out of a current plan? Look at your goals and start to look at what kind of mortgage is right for you.
2. Start with your existing lender. If you are a good client with a good payment record, they may offer you a special deal. If this does not work, then leave no stone unturned. Check out as many options as you can in the time that you have. Ask banks, brokers advisors, and check the Internet. It's up to you to get as many options and, as always, to be as educated as possible.
3. And finally, think hard about whether or not to go with a fixed-rate or adjustable rate mortgage. Right now, the difference in rates is nominal, and with interest rates potentially rising in the future, you may be able to lock yourself into savings.
For more information on mortgage refinancing, check out the HSH Associates Web site at http://www.hsh.com.
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