The average mortgage rate for a 30-year fixed-rate loan is no longer at record lows, but it is still relatively low compared to historical standards. If you paid off your current loan some time ago, you may be paying a higher interest rate than what is available today. Refinancing your mortgage could be a great way to lower your monthly payments or save on interest and reduce the term of your loan. If your main goal is to lower your monthly payment, then refinancing another 30-year mortgage is the best option.
However, if you want to save on interest and reduce the term of your loan, then refinancing a 30-year to a 15-year mortgage may be the best choice, as long as you can afford the higher monthly payments. Use a mortgage refinance calculator to get an idea of what might work for you. When interest rates fall, homeowners have the opportunity to refinance their existing loan for another loan that has a significantly shorter term without major changes in the monthly payment.
Refinance ratesvary by borrower and company, so it is important to get quotes from different lenders to see how a refinance could benefit you.
Ask each lender about their average closing times and the estimated closing costs they would have to pay. Your new rate will depend on your loan credentials and your willingness to compare prices with several refinance lenders. If you think you are qualified to refinance and a lender denies it, try again with another company. There are also several lenders that offer refinancing options with no closing cost, which allow you to include closing costs in your loan amount.
The amount you can save by refinancing depends on factors such as closing costs, which usually amount to between 2 and 5 percent of the principal amount of the loan. When refinancing, you usually need to complete a full mortgage application and go through the underwriting process just like when you bought your home. An oft-cited rule of thumb says that if mortgage rates are lower than the current rate by 1% or more, it might be a good idea to refinance them. Don't wait to see what will happen tomorrow if you can save money or get closer to your financial goals by refinancing today.