Interest rates fluctuate, and refinancing rates that are lower than your current rate could lower your mortgage payments significantly, leaving more money available for other investment in your business or home.
An illustration of how low refinance rates can positively affect your cash flow is if you refinance $250,000 for 30 years at a fixed rate of 5%, your payment would be $1,419.47; the same loan at a 6% interest rate would cost you $160.70 more each month.
Some reasons for mortgage refinancing are:
- Your current mortgage rate is considerably higher than the new low refinancing rates.
- You have a balloon note and are required to refinance.
- You've accrued equity and would like to refinance to provide extra cash for building improvements or other reasons.
- To convert your adjustable interest rate to a fixed refinance mortgage rate.
Stay current with available refinancing ratesKeeping up with the interest rates is a good way to know when to refinance your home. The economy affects mortgage rates and your payments rise with the rates if you have an adjustable rate mortgage.
Find out all the costs associated with mortgage refinancingAsk your broker for his current mortgage interest rates and see if the rates are fixed or adjustable. Also, you will need to know the annual percentage rate (APR), which takes into account the interest rates, fees and other charges.
Paying points may give you the best refinance rateFees paid to a mortgage refinance company are called points. One point is equal to one percent of your loan amount. These fees are usually paid at closing. The amount you pay for points is tax deductible for a new loan, but not for a refinance. Also, ask your mortgage refinancing lender if there are other fees related to your points. In some cases, you may come out ahead by paying points.
- Compare refinance rates between online mortgage refinancing companies and your local lenders.
- Often lenders will give you a low refinancing rate if you finance for a shorter term.