It is quite remarkable how many people who are eligible to refinance their current home, never do it. Most of their excuses are, "it won't save me much money," "I won't be approved since my homes value has dropped," or "there is too much involved, and too much to worry about." Well I'm here to tell you, that your assumptions are likely wrong.
First of all, refinancing is not much of a hassle at all. It takes a small amount of time at a bank or even on the phone, and can save you a bundle. Second of all, nearly everyone underestimates what a single percentage point can mean for ones monthly mortgage payment. Currently the Federal reserve is in the process of buying Government Treasury Bonds, virtually printing more money to the tune of $300 billion, in order to lower interest rates across the board. What is there target? Some experts believe that the Federal Reserve wants to see the average mortgage rate at around 4%. If this does happen, rates will be lower than any other time on record, and the possible savings for homeowners struggling to pay their current monthly mortgage payments would be, simply put, staggering. Many homeowners today have rates much higher then 4%. Their rates are probably anywhere from 5.5% to 10% depending on the when they got the initial loan, and if it was an adjustable rate which went sky high. The sad part is that most of these people have never considered how much they could save on their monthly payments if they do refinance.
Lets pretend you have a 30 year mortgage for $300,000 on your home. This mortgage was an adjustable rate and has adjusted recently to 8%. This means you will be paying approximately $2350 per month. Now, what if you took that loan and refinanced it at a new 4% interest rate? Your monthly payment would be cut over $800, and now only be $1550. Wow, right? Think about all the things you could use an extra $800 per month on? You could than afford the car payments for 2 brand new vehicles, or simply invest it for your retirement. Generally, for every 1% drop in interest rates, your monthly payment will go down $60 per $100,000 in loan value. If these savings are not enough to make you consider refinancing, then this will. Over the 30 year life of the loan, you would pay about $245,000 in interest with the 4% refinanced loan. On the other hand with the old 8% loan you would pay $516,000 over 30 years just in interest, more than twice as much money. I'm sure we could all use an extra $271,000 right?
Talk to your loan officer about refinancing. It could change your life in a big way.
First of all, refinancing is not much of a hassle at all. It takes a small amount of time at a bank or even on the phone, and can save you a bundle. Second of all, nearly everyone underestimates what a single percentage point can mean for ones monthly mortgage payment. Currently the Federal reserve is in the process of buying Government Treasury Bonds, virtually printing more money to the tune of $300 billion, in order to lower interest rates across the board. What is there target? Some experts believe that the Federal Reserve wants to see the average mortgage rate at around 4%. If this does happen, rates will be lower than any other time on record, and the possible savings for homeowners struggling to pay their current monthly mortgage payments would be, simply put, staggering. Many homeowners today have rates much higher then 4%. Their rates are probably anywhere from 5.5% to 10% depending on the when they got the initial loan, and if it was an adjustable rate which went sky high. The sad part is that most of these people have never considered how much they could save on their monthly payments if they do refinance.
Lets pretend you have a 30 year mortgage for $300,000 on your home. This mortgage was an adjustable rate and has adjusted recently to 8%. This means you will be paying approximately $2350 per month. Now, what if you took that loan and refinanced it at a new 4% interest rate? Your monthly payment would be cut over $800, and now only be $1550. Wow, right? Think about all the things you could use an extra $800 per month on? You could than afford the car payments for 2 brand new vehicles, or simply invest it for your retirement. Generally, for every 1% drop in interest rates, your monthly payment will go down $60 per $100,000 in loan value. If these savings are not enough to make you consider refinancing, then this will. Over the 30 year life of the loan, you would pay about $245,000 in interest with the 4% refinanced loan. On the other hand with the old 8% loan you would pay $516,000 over 30 years just in interest, more than twice as much money. I'm sure we could all use an extra $271,000 right?
Talk to your loan officer about refinancing. It could change your life in a big way.
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