I took advantage of my annual loan review to refinance several loans into one at lower interest and the same payoff period. I'm saving from a point to a point and a half, and frankly am wonderiering why I couldn't do better than that, but the note will be paid off in a couple of years and I didn't feel like squabbling over it.
Are you finding it attractive to refinance?
It depends on the situation. In some cases the added fees make it too costly for what you gain. My son found that out recently on his home mortgage. When I had my home mortgage at 6.25 % I found that multiple principal payments saved the most interest. Especially in the early years when your intrest payments are the largest portion of your monthly payment. Originally tyhe principal payment was a little over $200 and interest was over $500. So i would pay the $500 interest and $600 in principal which would eliminate two interest payments each time I did it.
Just get a copy of the amortization schedule pay this months payment and add on the next two principal payments. It's pretty easy to do in the early stages and saves alot of interest money.
The farm mortgage which is varible has cost me 2.5% interest for the last two years. The year before that 3.5% and the highest was 7%. Who would have ever thought that interest rates would be so low for so long? At the beginning of the contract I thought if the variable rate got too high I would merely liquidate other assets and retire the farm mortgage. I haven't done that yet but since then I bought another farm and paid that one off first because it was at a higher rate.
I hope that people will be conservative in regards to this issue, and not bite off more than they can chew on normal interest rates. Making decisions based upon record high prices and record low interest rates would be a double-trouble formula to me. Things can - and have - gone the other way, too.
All excellant points having wrtten one down to 4.1 % from 5.95 consider the ""fees ""one needs to ""carefully "" examine --- although had the cash to pay off I thought the cash on hand was a plus---
There are some pretty standard equations for whether or not the costs of a refi are worthwhile. I asked on behalf of my daughter and SIL last summer, since iI was reading about interest being lowest in forty years. The mortgage loan officer ran rules of thumb by me, and I wriote them down, then gave them the slip of paper when i got home.
With their principle balance and the significant drop in rates since they had built their home, and only their lawyer to pay for the legals, since the bank didn't charge points this time, it was a no-brainer. SIL told me they knocked off over seven years on the end of it. That was well worth about $1500, which they rolled in for the refi costs. Do you know anyone whose monthly house payments over seven years woudl be only that tad bit?
We refinanced a home a year ago. Paid $450 fee to lower the interest about 2 points. Was worth the money. No other additional costs incurred. Got more than our money back in six months, with the rest of the loan giving additional savings by reducing the time to payout.