Mortgage Refinancing Rates

By Sam Ferdi

Refinance Mortgage Rates

Refinancing Questions.

Are you considering refinancing your mortgage and need the answers to some of your questions. You may be considering a fixed rate mortgage vs. an adjustable rate mortgage. Should you use a prepayment penalty to lower your rate? How long will it take for your loan to fund? How many months of mortgage payments can you skip when you refinance your mortgage loan? Which index is my loan tied to?

The impact of rates.

When interest rates were two points below your current mortgage rate, it was considered a good rule of thumb to refinance.

A lower mortgage interest rate means you will pay less interest per year, and this means less interest to deduct from your income tax. Your income tax liability will probably increase, and then this will have to be offset against the savings in mortgage interest.

There are some refinancing costs that may be tax deductible within the year you are refinancing. However, in order for the discount points to be deductible, it must be spread out amongst the life of the mortgage.

Refinancing is simply paying off one loan and taking a new one. Usually, loan cost range between $2000 to $6000 for a $200,000 loan. You will also have to add in points for lower interest rates, adding additional thousands.

Many brokers who build their fees into the home mortgage refinancing rate aren’t willing to be honest about their fee structure.

When the economy becomes weak and there is less borrowing, interest rate declines. It is then people who have borrowed during high interest rates move towards refinancing. To make refinancing rates worth it financially, you need to be sure that these interest rates are low enough to pay for the cost of refinancing.

A decline in short term rates causes more and more people to borrow. These in turn result in inflation.

Besides interest rates, you also need to compare terms. The shorter the loan the less you will pay in interest. Ideally when you refinance, you should choose a loan with a shorter term.

Second mortgage refinancing.

Refinancing a second mortgage can reduce your monthly payments and interest rates. To get the best deal, you need to research refinancing rates. Researching refinancing rates for a second mortgage will save you money. Also remember that you can negotiate lower rates by agreeing to pay higher closing costs

Not all lenders charge the same fees or interest rates, so you can save thousands by searching for lenders.

If you plan to sell your home in a year, the higher rate mortgage is actually cheaper.  If you have more than one mortgage, don’t forget to check out refinancing your mortgages into one loan. Combining your loans will lower your total rate. Also, the shorter your loan, the less you will pay in interest costs.