Mortgage costs, we keep hearing, are going to go up when the Federal Reserve at long last gets around the lifting short-term interest rates. While long and short rates don’t move in lockstep, Fed tightening tends to boost long rates eventually. AdviceIQ Network member Rick Kahler, present of Kahler Financial Group in Rapid City, S.D., tells us how to get in on refinancing to a lower rate while the option lasts:
Interest rates on home loans still are very low in historical terms. That means it remains a good time to dig out your mortgage loan paperwork and consider if refinancing is right for you.
Five years ago, the government started injecting trillions of dollars into the U.S. economy. Conventional wisdom suggested that rising interest rates were soon to follow. Some even predicted the collapse of the dollar and hyper-inflation. Instead, inflation is down, the dollar is the strongest it’s been in 10 years, and interest rates fall to the lowest levels in decades.
When refinancing, you take out a new, lower-interest loan to pay off the old one. Here’s how to find out whether it’s a good option:
First, check the current interest rate on your mortgage loan. Let’s assume you have a balance of $200,000, with monthly principal and interest payments of $1,013 at a rate of 4.5%.
Next, shop around. Call two or three mortgage brokers and find out the interest rate you can obtain on a new loan. They’ll ask for your household income, the value of your house and the current balance on your mortgage. If you don’t know how much your home is worth, contact your local property tax office for an assessed value.
Ask the brokers to give you the interest rate and payments on a mortgage similar to the number of years left on your current loan. Also ask about a shorter-term loan, which usually has a lower interest rate.
When shopping for a new mortgage, you may be tempted to reduce your payments even more by lengthening the term of your new loan. While the benefit is more spending money per month, you can end up paying more in interest. I strongly suggest obtaining a new mortgage that is equal to or less than the number of years remaining on your current loan.
John Schuler | NMLS# 76904
Senior Loan Officer | Movement Mortgage
12780 High Bluff Dr | Suite 130
San Diego | CA | 92130
d: 858.436.8248 | c: 760.707.9353 | f: 619.821.2024
No comments:
Post a Comment