Earlier this week my brothers mortgage lender called him offering a 5.25% rate on a mortgage if I refinance. This would almost be $200 a month in saved money just by saving refinancing 1% lower lower than my current rate. However, I would be responsible for the near $1,600 dollars in closing costs/ According to my math, I would break even, including the closing costs, in about 8 months from now. Although, I think I will hold out for a lower rate, or a less costly closing cost.
Mortgage rates are falling
On November 26th, the Government announced that it would buy over $500 billion of securities used to back mortgages issued by Freddie Mac & Fannie Mae as well as $100 billion in direct debt from the two. Upon this news, mortgage rates instantly dropped .5% to 5.5% within 1 week, followed by mortgage applications doubled
Why didnt my brother refinance?
He thought, and is probably correct, that interest rates would fall even lower within a few months, somewhere around 4.5% Then, he could possibly save even more then, instead of refinancing yet again later. He watches the mortgage rates everyday as you should.
Do Your Research.
Make sure to look at websites with advertisements for mortgage refinance lenders. This is a good way to check a lot of different websites, and get estimates, all at the same time. Choose the loan that you feel comfortable with and has the best rates and terms. Sometimes, shortening the lengthof a mortgage is better than saving every month.
-M Petrone


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