Monday, February 14, 2011

Money Monday - Refinancing, is it worth it?

I saw something cool in my Parents Magazine that gave guidelines when you're thinking about refinancing your mortgage. Interest rates are at 50 year lows and it can be difficult to know whether or not it's worth it to refinance. Sometimes, with closing costs (averaging $2654) and fees, it's better just to stay put. I've heard that, as a rule of thumb, you should stay where you are unless the interest rate is more than a full 1% below what you're already paying.

Two websites that will help you calculate whether or not it's worth the hassle?

bankrate.com

hsh.com

Also keep in mind:

REFINANCE IF:

• Interest rates are at least one full percentage point lower than what you already pay.

• Your current loan has a variable interest rate. Rates are only going up from here!

SIT TIGHT IF:

• The value of your home has gone down significantly since the economic crisis and you are unsure if you're qualify for a new mortgage.

• You plan to move in the next few years.

I must say, I was shocked to get a 4.25% interest rate when we purchased our current house last summer that. Our previous house was 5.1% and I really didn't think people got much lower than that. If you're financially prepared - now is the time to buy.

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