Mortgage Rates Today
Mortgage rates today make refinancing your home mortgage loan worth while if the current mortgage rate on your home loan is at least 1.00% higher than today’s mortgage rates. Right now 30 year mortgage rates are around 4.00% so if you have a home loan with a mortgage rate at 5.00% or higher refinancing will save you money.
Better yet if you feel you can refinancing from a 30 year mortgage to a 15 year mortgage current mortgage rate on 15 year home loans are even lower than 30 year mortgage rates. Right now you can secure a 15 year mortgage rate 3.25%. If you have a 30 year loan at a higher rate as compared with today’s mortgage rates you’re monthly mortgage payments might not even go up that much.
Dont’ know what home equity means? Home equity is the dollar value difference between the balance you owe on your mortgage loan and the value of your home. Example: Your home is worth $500,000, you owe $400,000 on your home loan, the equity in your home is $100,000.
Of course there are other factors that come into play, the main factor being do you have enough equity in your home to refinance. Most lenders require at least 20 equity which means you can’t borrow more than 80% of your homes value.
You can find lenders that are will to go higher than 80% so when you’re shopping around and comparing mortgage rates currently available ask what loan to value they are going up to. If you’re not taking any cash out of your home when refinancing you might find a lender going up to 90% or more.
There is also a government program called Making Home Affordable which allows homeowners to refinance a loan held by Freddie Mac or Fannie Mae with a lot higher Loan To Value (LTV) ratio. Here is a Making Home Affordable video which is explains some of the program:
If you do have enough equity in your home you might choose to refinance, and take cash out to remodel your home, payoff credit cards or pay for your son or daughter college education. If you take cash out to pay for other things realize that you will pay interest on the additional cash you take out. Since mortgage rates are so low right now the interest rate you pay on the mortgage will probably be less than a credit card rate or any other loan rate.
Remember that, along with the potential benefits to refinancing, there are also costs when you refinance even with lower mortgage rates. Yes, mortgage rates today have fallen to record lows when you refinance for an amount greater than what you owe on your home. You can receive the difference in a cash payment this is called a cash-out refinancing. But regardless you could shop the lowest mortgage rates currently available.
One of the drawbacks to refinancing is the mortgage settlement costs (closing costs) you have to pay. If you plan to stay in your home or a long while the costs you pay at closing can be regained in interest saving.
To sum-up refinancing only makes sense if the mortgage rate on your current home loan is at lest 1.00% higher than mortgage rates today. In addtion, if you are planning on refinancing make sure you’re not planning on selling your home in a couple of years because you won’t make up the closing costs you have to pay in interest savings in 2 years or less. Shop around and compare mortgage rates to get the best mortgage rate possible.