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Refinancing Your Home
Wednesday
June 27, 2001
It's the biggest check you write each month: your house payment. Thanks to Mr. Greenspan and his recent interest rate cuts, more people than ever are refinancing their homes.
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Rates are hovering around 7-percent and experts say don’t wait, it won’t get much better.
Los Angeles realtor Paul Scherrer says low rates are great, but you have to think about the real cost of refinancing: points, fees, and closing costs.
He says, “If it's going to take six years for you to recuperate those costs, and you're planning on moving in three, it doesn’t make sense to refinance.
But you've seen and heard about "no-cost" refinances? Paul says, “Can it be no points? Can it be no fees? Well, maybe not out-of-pocket to you now, but it will in one way or another be incorporated into that loan.”
So before you get that new loan, get answers.
Is the rate change enough? It needs to be at least one point lower than what you've got.
How long have you had that current mortgage? Shorter is better.
Does that mortgage have a prepayment penalty? If so, it could cost thousands.
And don't be afraid to start a little friendly competition. Get all the information you need on your refinance from one bank, then cross the street, go around the corner or hop on the internet and find out who wants to give you the best deal.
It’s a deal that might make writing that monthly mortgage payment a little less painful.
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