Is Refinancing Right for You?

Three things regarding the present state of mortgages are clear:

1. Mortgage interest rates are currently at or near their lowest point in three decades.

2. They are unlikely to go lower.

3. Exactly how soon they will go up, no one knows for sure, but the latest news indicates that it will be by the end of this year.

So, if you own a home, now is an excellent time to consider refinancing -- or refinancing again.

A refinance mortgage (known as a “refi”) is a loan on your currently owned property. With the proceeds of this new loan, you pay off the existing mortgage (or mortgages). Generally, there are two types of refinance mortgages:

• “No-cash-out” refi’s are mortgages in which the amount borrowed doesn’t exceed the mortgage debt currently owed. Such loans may require you to pay points and closing costs out-of-pocket.

Mortgages on which you pay points charge a lower interest rate than those with no points. Each point – an up-front interest fee paid on a mortgage – is equal to 1 percent of the amount you borrow. The more points you pay, the lower your mortgage interest rate will be – about 0.5 percent to 1 percent less than the rate on a no-point mortgage.