You may have been hearing (relentlessly) that interest rates are at an all time low, and now is the time to refinance. In the back of your mind you are thinking, "Ya, ya, ya... This is the same thing you all have been saying on and off for a while now." Well, I am here to say that the time has ACTUALLY come. Starting on June 11, the feds have actually sweetened the deal quite a bit... at least for people whose original FHA loan was taken out prior to June of 2009. (Unfortunately, that cuts me out of the deal, but I will encourage all of you to participate so that I can live vicariously through your savings!)
The first part of the savings comes in the form of a lowered upfront PMI fee. This is being slashed from 1.75% of the loan amount down to .01% of the loan amount. (For a $200,000 mortgage, you would previously pay $3500 at closing. Now, your fee would be a mere $20.) But it gets even better... your annual PMI insurance premium will be calculated as .55% of the loan balance rather than the current rate of 1.25%.
After you compound all of this savings with the money you will save from getting a new lower interest rate (rates are currently hovering around 3.75 for a 30 year fixed) you will be laughing your way all the way to the bank! OR you can be really fiscally intelligent... Dare I suggest that you utilize this savings in order to make the very wise decision to refinance to a 15 year mortgage instead of stretching your payments back out over 30 years?!? (Rates for a 15 year fixed are near an even 3%.) You might surprise yourself to find that you can refinance over 15 years for the same monthly payment you are currently making! So head on over to http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx and see just how much you can save from your new interest rate, and then navigate back the the home page to compare interest rates in your area and get started! DO IT! Your savings account will thank you!
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