Refinancing your mortgage is it worth it?
Refinancing your mortgage is it worth it
The interest rate pendulum has swung in favor of homeowners again.
A steady decline in recent weeks brought down the average rate for a 30-year fixed home loan below 4 percent to 3.92 percent this week, the lowest level in more than a year. As recently as January, the average was 4.53 percent, according to mortgage giant Freddie Mac.
That’s good news for homeowners who are locked in at a higher interest rate and weren’t able to refinance before rates began ticking up last year. The decline in mortgage rates has spurred a surge in mortgage refinancing. Applications reached their highest level since November 2013 last week, according to the Mortgage Bankers Association.
A reduction in your mortgage interest rate can translate into significant savings. The key is ensuring they aren’t outweighed by the charges and fees involved.
“You want to be careful to do the math and be sure you’re coming out ahead,” said Gary Kalman, executive vice president at the Center for Responsible Lending.
Here are some tips to help you determine whether refinancing your mortgage will pay off:
- UNDERSTAND THE FEES
- GET A LOW-ENOUGH RATE
- DO THE MATH
- DETERMINE WHEN YOU WILL BREAK EVEN
- SHOP AROUND
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