4 things you need to know about refinancing to a record-low mortgage rate
4 things you need to know about refinancing at a record low mortgage rate
Mortgage rates have fallen to incredibly low levels in 2020 thanks to the economic chaos sparked by the coronavirus. Thirty-year mortgages well below 3% have become the norm as interest rates have fallen more than a full percentage point below last year's levels.
If you're a homeowner with an existing mortgage and haven't gotten a refinance, here's what you need to do - just like you do now. According to a recent report, more than 19 million mortgage holders are ripe for a refi.
Refinancing to today's record lows can save you a few thousand dollars a year in interest and tens of thousands of dollars over the course of your loan.
When you think it is time to replace your mortgage with a new one, there are four things you should keep in mind so that you can get the most from your refi.
1. You should be sure that a refi is right
Before committing to any refinancing, there are a few important things to consider. Today's basement mortgage rates are irresistible, but the terms of your existing mortgage could include loan terms that would make refinancing a bad call.
Some mortgages come with an early repayment penalty, especially in the early years. You might also run into legal complications when using a local government grant program, such as one for first-time buyers.
Before looking into refinancing loans, read your mortgage documents carefully to make sure you are not being burdened with exorbitant fees.
You also need to make sure that refinancing won't cost you more in the long run.
If your current mortgage has a 30 year term and you have already paid back half of it, refinancing to a new 30 year fixed rate mortgage could cost you tens or possibly hundreds of thousands of dollars in additional interest. It might be wise to take out a 15 year loan instead.
2. It is good to speak to a professional
The best way to make sure refinancing is the right decision is to consult a professional. An online financial planning service gives you world class financial advice without the high fees.
A certified financial planner will not only advise you on your refi, but will also help you create a retirement plan that is tailored to your mortgage.
This way, after your home loan is repaid in full, you can be confident that you have already saved some loose change for your golden years.
With a simple 30-minute phone call, you can think about your financial goals and priorities - and how refinancing can help you meet those goals.
3. You need to compare the interest rates to find the right loan
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Around 19.4 million homeowners are sitting on old mortgages with interest rates high enough that they could save an average of $ 308 a month by refinancing, mortgage technology and data provider Black Knight reported in early December.
With mortgage rates this low, you might be tempted to take advantage of the first refinancing offer. However, if you shop and compare prices, you may save even more on your new monthly payment.
You can always do this the old fashioned way by researching the local lenders and contacting them individually about their interest rates - but that could take a long time. A better option is to go online, get quotes from at least three lenders, and compare them.
Easily compare lender interest rates, loan terms, and monthly payments side by side, and read user reviews for each bank, credit union, or credit company to help make your decision.
Checking mortgage rates never affects your creditworthiness. When planning a refinance, you owe it to yourself to look around and find the best rate available.
4. You want to protect your investment - and your family
After choosing your new loan, take a fresh look at your homeowner insurance. Are You Paying Too Much? Go online, get multiple quotes on home insurance and make sure you have the right coverage at the right price.
And while it is not pleasant to think about, it is important that, as a homeowner, you have the opportunity for something unexpected to happen to you personally. You want to make sure that your family doesn't have to worry about how they would make the mortgage payments in the unlikely event of your death.
The best way to ensure that your family is financially secure is to get life insurance. The idea of shopping for life insurance might seem a little awkward, but a good online comparison site can make the process painless.
In just a few minutes, you can find the three best prices for your family's specific needs. Depending on how old you are and where you live, you may find a policy that gives your loved ones financial protection of $ 1 million for less than $ 7 a week.
It never hurts to be prepared. And while you can't put a price on security, you know you are getting the best coverage available.
You should check here to buy the best price guaranteed products.
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On This Day: 22 October 2018