Buying a home is a dream for millions of people. Upon securing a mortgage, the dream becomes a reality.
Reality does, however, can become a bitter pill at times. Among the most bitter pill to swallow when paying a mortgage would be paying a high interest rate. In order to get from under the high costs of an excessive mortgage, refinancing becomes an option.
Refinancing a mortgage simply means a new loan is acquired to pay off an existing one. Refinancing a mortgage leads to a new mortgage that is less costly because the interest rate is cheaper. The terms could be different such as changing a 30 year mortgage to a 15 year mortgage — or vice versa — is possible, too.
For those interested in just paying less, then the goal is to acquire a lower interest rate.
A mortgage interest rate of 3.9% replaced by a 3.4% interest rate absolutely leads to a major savings on the remainder of a mortgage. If a $200,000 balance remains on 25 years of the mortgage the savings can be huge.
3.9% would yield a final cost of $313,399, which means $1,045 in payments per month.
3.4% would yield a final cost of $297,166, which means $991 in payments per month.
The final savings would be $16,233. The $46 saved per month yields $552 per year. Putting that money into an investment vehicle that pays 4% per year would turn the $16,233 into a total of $25,380 by the end of the 25 years.
There is an ominous cloud that can roll in over a home with a high interest rate. A common reason why homes are foreclosed upon is because the interest rates are just too high.
A person’s financial circumstances may change and do so without any expectation. A variable interest rate can further compound the situation. Vairable interest rate disasters led to the high foreclosure rates of the late 2000’s.
A refi interest plan is not done without careful deliberation. People find there is a need to chanrge the terms of a mortgage for serious financial reasons. Paying too much for a mortgage is simply financially dangerous. Refinancing offers a way out.
Mortgage interest refinance rates do change as various different factors contribute to increases and decreases in rates.
The fluctuations can vary, but there is a certain level of consistency among the averages. There has to be. A lender cannot charge a ridiculously higher rate than what competitors are offering. No one would bother to apply to such a lender.
Citibank is offering rates of 3.801%. Santander Bank lists 3.832% rates. Bank of America presents 3.750% rates. Chase mortgage refinance rates are in the range of 3.625%.
These rates reflect 30-year fixed mortgage rates. The rates would be lower on 15-year fixed rates. The Chase 15-year rate, for example, would be around 2.875%.