To refinance or not to refinance - that is the question
Clark Howard, WSB-TV consumer adviser
I'm a dull guy, and I've got proof. Everyday I look at interest rates in the money and Investing section of the Wall Street Journal, and I've found some neat scoop. You can probably save money on a home loan. In fact, 1 in 4 of us should get to it with refinancing our mortgage. How do you know if you're in that 1 in 4? Here's how:
First, if you have a 30-year fixed rate mortgage that is above 8%, it's time to refinance.
I'd prefer you take that 30-year loan and refinance it into a 15-year loan. Why? Even though you are going to have a little bit of a bump in payment, you are going to get a much better deal on your interest rate, making it make sense for you to refinance if you're current interest rate is 71/2 percent or more.
Next, if you have an adjustable rate loan known as an ARM, you should refinance to a fixed loan.
You should only refinance if you plan on staying in the home for more than 18 months. Otherwise the cost may outweigh the gains.
Those are my guidelines, but heed my warning. Never pick a loan just because of the rate. There are more things to keep in mind.
You need to check for any fees and points being charged. Each point is 1% of the money you are borrowing. I don't like you to pay points, so stay away from them. And if you want to comparison shop loans on the Web, check at bankrate.com , monstermoving.com, and countrywide.com.
It's possible rates could go even lower from here, but it's more likely that rates are pretty much near the bottom. So if it were me, I wouldn't sit on my hands anymore, if you're in the 1 in 4 that could benefit from refinancing. Now, get to it!
|
