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Benefits of mortgage refinancing

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During the past 30 years, interest rates have reduced and moved significantly in a financial tide of Bad Credit Home Refinance. For example rates for traditional 30 year, fixed rate mortgages were around 18 percent near the beginning of the 1980s, right now, we can see that the interest rates have lowered up to 5 percent and some recent days have witnessed that the level of interest rates have lowered down up to 4 percent.

is it time to refinance consolidate

Those home owners who have bought their homes when interest rates were far high than the today’s rates, are now considering mortgage refinance in order to get the benefit of today’s lower rates. If you’re also one of those homeowners, then you should have complete knowledge about the expected costs that might be involved in refinancing your home, some of these are appraisal, title insurance, and a loan origination fee. You can use the general rule of thumb called the 2 percent rule in order to figure out that this total cost of refinancing is either higher or lower than the potential money you can save by refinancing. Simply, in this rule it is mentioned that the percentage difference between the current interest rate you have on your loan and the new rate being offered should not be less than 2 points. Refinancing could be most beneficial for those borrowers who have bought their homes in 1980’s and have got 18 percent interest rate, and if they go with the refinancing option they will get the interest rate of 4 percent, which gives them a huge difference of 14 percent.

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September 2011
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