Compare Refinance Quotes
National Mortgage Rates 14 February 2012
| Loan Type | Today | +/- | Last Week |
|---|---|---|---|
| 15 yr fixed | 3.10 |
|
3.12 |
| 30 yr fixed | 3.80 |
|
3.81 |
| 5/1 ARM | 2.73 | - | 2.73 |
Rates may contain points
Mortgage Refinance Options
Get widgets
Print
Facebook
RSS- By:
- Kirk Haverkamp - MortgageLoan.com
When refinancing a mortgage, many borrowers focus exclusively on getting a lower interest rate. But interest rates are only part of the picture – there are many other options to consider as well.
True, getting a lower rate is usually the primary goal in refinancing – and the rock-bottom mortgage interest rates over the past year have generated a lot of activity. But refinancing isn’t simply about trading one 30-year mortgage for another with a lower rate – there are a lot of other choices you can make to maximize your savings or tailor your refinance to your own particular circumstances.
Reducing your monthly payment
For example, the primary goal for most homeowners when refinancing is to lower their monthly mortgage payment. And a lower interest rate is definitely a way to do that. But it’s not the only way. You can also extend the term on your current mortgage – for example, refinancing into another 30-year loan when you have 23 years remaining on your current one. Or stretching it out to a 40-year loan, which many lenders offer.
In either case, you’re lowering your monthly payment by extending how long it will take to pay the mortgage off. Of course, there are downsides to this – you’ll pay more interest over the long run, won’t build equity as quickly and you’ll be making mortgage payments for a much longer time if you stay in the house that long. But for someone in a tight financial situation, lowering the monthly payment may be the most important thing – and choosing your refinance options is all about tailoring the loan to your needs.
An earlier payoff date
Another option is to reduce the term of the loan. This is a very popular choice these days among many homeowners who originally took out 30-year fixed-rate loans about 10 years ago or so. Because rates on 15-year loans are so low – currently about half a percent lower than comparable 30-year fixed-rate loans – they can often refinance into a shorter term for about the same monthly payment and pay off their loan several years earlier.
You can also dramatically lower your rate by choosing a different type of loan. For example, many borrowers with fixed-rate loans don’t consider an adjustable-rate mortgage (ARM) when refinancing – although the initial rate can be much lower than a fixed-rate loan. Also, because ARMs typically amortize over 30 years, the principal payments are low as well.
ARMs can be a good refinancing choice for disciplined homeowners with equity in their property. Because the interest rate eventually will eventually reset a few years down the road, possibly to a much higher rate, you want to be sure you’ll have enough equity in the property to refinance again before it does. If you don’t, you can get stuck – but an ARM can be an effective financial strategy for know how to avoid the pitfalls.
"No-cost" refinancing
People are sometimes confused whether it’s worthwhile to refinance or not. This is because you’ll need to save enough on the refinance to make up for the closing costs on the new mortgage. An easy way to address this is with a so-called “no-cost” refinance, where the closing costs are rolled into the new mortgage itself, often in the form of a slightly higher interest rate than if you’d paid the closing costs separately.
With a “no-cost” refinance, all you have to do is make sure your new monthly payments will be less than your old ones - assuming your eventual payoff date remains the same. If it is, you’re saving money. A word of warning – no-cost refinances typically come with steep early payoff penalties to ensure you stick with the loan long enough for the lender to recoup its expenses.
And again, keep an eye on that payoff date – you want to be sure the term of the new mortgage is about the same or less than the old one, so that the lender isn’t artificially lowering your monthly payment by stretching out the term of the loan.
Low Mortgage rates is our mission
Bringing the best rates on the market to
you is our primary focus. Fill the form to get a quote based on your conditions.
/Mortgageloan.com
-
New Home
Looking to get on the property ladder? Discover your spending power. Get a rate quote today.
-
Debt Consolidation
Are your debt woes getting you down? Explore your options now by filling out our form.
-
Home Equity
Is fluctuating home value a constant cause for concern? Our advice - take out a new loan today.
-
Mortgage Calculators
Need help getting a grip on your expenses and finances. Try one of our 137 multipurpose calculators.
Call For Rates
800-419-1494
Speak to a lender now.
We will match calls to our toll free number with our network of lenders.
National Rates
| Loan Type | Today | +/- |
|---|---|---|
| 30 yr fixed | 3.80 | |
| 15 yr fixed | 3.10 | |
| 5/1 ARM | 2.73 |
Rates may contain points
Browse Mortgage Rates
Featured Guides
Browse our comprehensive guides to popular topics related to mortgage and personal finance.