Should Interest Rates Be Raised?

Are you worried about Mortgage Rates rising?  You should be because according CNN, “Interest rates may remain low”

Protect Your Indentity/Credit!

Protect your Identity/Credit!

One of the most disheartening situations I come across as I work with people in this industry is when I run someone’s credit and it is full of items they knew nothing about. It can take months to clean this information off of your credit report. I recently received an email with several great suggestions on how you can protect your credit/identity. These suggestions may save you a lot of grief.

Is Now The Best Time to Refinance?

One of the questions I’m most commonly asked regarding refinancing is …

“Would now be a good time for me to refinance?”

Although mortgage interest rates are still incredibly low there are several factors that should be considered in answering this question. First, you need to determine why you are considering refinancing. It may be to consolidate debt? Lower your monthly payment? Change from a variable rate mortgage to a “Fixed Rate” mortgage? Make improvements to your home? Or maybe to maximize your savings by taking advantage of these low interest rates? It may be any one or a combination of any of these reasons. Once you’ve determined what your motive is for refinancing then the most important part of the process begins, finding the correct loan program and the correct structure to help you most effectively achieve your goal. This is what separated the value of true mortgage consultant from simply an order taker.

How Low is Low Enough?

Many times I hear a statement like, “I’ve been told you need to lower your interest rate at least 1% for it to make sense to refinance.” This is not true. There really is no rule of thumb that works universally. It depends upon the size of your loan, how long you will be staying in your home and what your reason is for refinancing. Do you want to lower your monthly payment? Or do you want to maximize the amount of interest you will pay over the term of your loan? Answers to questions like these are needed to for your mortgage consultant to determine if the interest rate is low enough for it to make sense for you to refinance.

Let me give you an example: Let say you have an existing loan of $400,000, a rate of 5.625% and a payment of $2,350. The current interest rate available to refinance is 5%, because you are comfortable with your existing payment we keep the monthly payment the same to maximize your interest saving, take nearly three years off the term of the loan, and save you nearly $80,000 of interest over the term of the loan.

This is one example of how with proper structuring of a loan you can save a lot of money with an interest rate reduction well below a 1% reduction.