Current Mortgage Refinance Rates - Tips You Should Know

Your home represents many different things at the same time: a place to be protected from the elements, a place to feel secure, a place to entertain guests, a place to raise your kids, and a place to serve as a long-term investment for your family.

For most people, buying a home is usually the biggest purchase they will ever make. When it comes to mortgages, the most important variable is that of the interest rate. Just a small change in the interest rate can mean huge savings over the life of the mortgage.

For example, on a $250,000 loan with payments spread over 30 years, you would save over $100,000 (that's right, nearly half of the initial borrowed amount) in total interest payments by shaving just 2% off of the interest rate (say, from 7.5% down to 5.5%).

The Wonders Of Refinancing

Mortgage rates are always changing. Depending upon a few macro-economic factors such as the prime rate and housing sales trends, average mortgage rates can easily change by two or more points (percentage points) within just a few months or years.

That is why refinancing your mortgage can be such as smart idea. Refinancing is simply the act of replacing your existing mortgage with a new mortgage, usually at a better interest rate. Doing so can save you a ton of money in interest payments over the life of the loan.

Why Getting The Current Mortgage Refinance Rates Matters

Given that mortgage refinance rates are always in flux - even on a day-to-day basis - it is important to keep your finger on the pulse of the market. While nobody is smart enough to time the mortgage rate market completely, any lay person can follow the general trends. If the rate is at least 0.5% lower than what it was when you signed your current mortgage loan, it may be time for you to refinance.

The Types Of Rates

When you look for published mortgage rates, you will notice various types of rates. The most commonly-posted rates, however will be:

a. 30 Year Fixed Rate

b. 15 Year Fixed Rate

c. 5/1 Adjustable Rate

Of course, there are many other types of rates available, but by keeping your eye on these rates over time, you can get a good sense as to where the market is going.

Fixed rate mortgages are just that: they stay the same over the life of the mortgage. Meanwhile, adjustable rate mortgages (also called ARMs), means there is a fixed rate for the first few years and then an adjustable rate after that.

Factors That Affect The Rate You Get Offered

When looking at the rates from a particular lender, make sure to keep in mind that the posted rates may not represent the actual rates you get offered. That is because they will take into account your credit score when preparing your offer. Also, in some instances the lender may add "points" to your loan in exchange for your getting the posted, lower rate. One point in lender's fees means the equivalent of 1% of your total borrowed amount would go to the lender as a fee.

Be sure to ask about whether any points are being taken into account when you view your lending offers.

The Importance Of Shopping Your Rates

Finally, make sure that you solicit mortgage refinance proposals from multiple lenders. As with anything else in life or in business, more choices is always better. Be sure to get at least 5 offers from different lenders before settling up any one offer.

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