Interest rates are at the lowest they have been since World War II, and millions of Americans are taking advantage of the opportunity by refinancing their mortgages. Others are tempted to refinance, but are hesitant to get started. Is it really worth contacting a lender just to save a point or two of interest?
To decide if refinancing is worthwhile, you need to determine how much you will save with a lower rate. For example, if you have a $150,000 mortgage balance, a 30 year term and a current rate of 6.25%, your payments should be about $923 before taxes and insurance. The same loan with a rate of 5% would make your monthly payments about $805 before taxes and insurance. That is a savings of $118 per month or $1,416 per year!
For many of us, any savings is enough of a reason to refinance into a lower rate. This additional money could help rebuild retirement accounts, go toward a college fund or just ease the burden monthly expenses can have on a family.
You don’t have to do these calculations by yourself. And there are numerous loan options to consider. To help you decide what to do, it is best to contact a mortgage expert. He or she will be able to work with you on different scenarios and help you determine which one will work best so you can achieve your financial goals while taking advantage of historically low interest rates.
