MoneyRates Monthly Resolution #1: Mortgage Refinancing

Just after New Year's, MoneyRates.com posted an article kicking off 12 monthly resolutions for savers in 2010. Each month throughout the year, we'll look at one of those 12 resolutions in greater detail.

By tackling one money-saving idea each month through the year, you'll be in better saving shape than if you made a grand New Year's resolution to "save more" and let it fall by the wayside. These monthly resolution articles are your training wheels to better personal savings rates.

January's Monthly Resolution: Mortgage Refinancing

If you've been cursing the low level of bank rates, remember that the flip side of low bank rates for depositors is low mortgage rates for borrowers. Mortgage rates have been at or near record lows for a year now, but not everyone has taken advantage of them yet. If you fit into one of these three categories, you should resolve to take a fresh look at refinancing sometime in 2010:

• You are a procrastinator. Yes, there is paperwork involved in refinancing, and it means coming up to speed on current mortgage conditions. Still, of all the decisions you might put off, this is probably the one where delay is the most costly. Refinance today and put procrastination off till tomorrow.
• Your house was underwater when mortgage rates originally came down. Many people found their home values had dropped below their remaining mortgage balances, and thus they could not qualify for a mortgage. However, with the passage of time, home values have stabilized and a few more mortgage payments should have lowered your mortgage balance. It's worth checking to see if you have enough equity now to qualify for refinancing, even if you didn't have enough equity a few months ago.
• Personal circumstances prevented you from refinancing. Poor credit or loss of a job prevented many people from refinancing just when it could have helped the most. However, with the economy recovering, if your personal circumstances have improved, take a fresh look at refinancing.

Remember, if you have several years of mortgage payments under your belt, consider getting an even lower mortgage rate by refinancing to a shorter-term mortgage. 15-year mortgage rates generally run about 50 basis points (0.50%) below 30-year mortgage rates.

MoneyRates.com's monthly resolution series will be back next month on the topic of direct deposits.

 

Source:

30-Year Fixed-Rate Mortgages Since 1971 • http://www.freddiemac.com/pmms/pmms30.htm • Freddie Mac

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