Refinancing Under 5% – How Much Will You Save?
Posted: December 22nd, 2008 | Author: admin | Filed under: Uncategorized | 4 Comments »
After doing some research, it is quite evident there are lenders offering mortgage rates under 5% across the United States. Just six months ago, these rates were unthinkable. With rates declining at a steady pace, no one can guess where the true bottom will be, so many American citizens are taking advantage now and refinancing under 5%. Using the mortgage calculators available online and through this site, how much money will you save per month?
Refinancing a $200,000 mortgage at 4.8% versus paying on a current mortgage at 6.0% will save you up to $200 a month. In one year alone, you would save $2400 on your mortgage payments and that is not calculating the fact that your mortgage will get paid off much quicker as you will be able to apply a greater amount towards the principal. With that in mind, if closing costs are not unheard of, there is no reason to pass up refinancing unless you have a strong inclination that rates are headed even lower and you can pick the bottom of the housing market.
After doing some research, I would like to know what refinancing your home at the lowest rate in your market would save you per month?
Because of the economic downfall in the housing industry, refinancing of mortgages may be a common practice the coming months. Low interest rates and the receptiveness of borrowers toward the idea of refinancing may help save many buyers and current homeowners having trouble making payments. Although many have vouched for the benefits of refinancing, homeowners should evaluate their personal preferences, financial standing and current mortgage status and compare these with the various options available before planning their next move. Refinancing your mortgage is for the long term and needs to be a choice that is thoroughly considered.
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Picture yourself as a lender. Would you want to take a risk of giving a mortgage when you are only going to get a 4.8 return and inflation is around the corner. Maybe the government should raise interest to a point where people are willing to risk the exposure and actually lend the money. Cheap money is worthless if you can’t get it.
Clearly, Robert doesn’t know anything about fractional reserve banking. The bank isn’t losing money on loan interest that falls lower than inflation rates. They usually have at any given time 10 times more loans than they have funds to account for. This mean the bank is effectively holding 48% interest on the funds on hand at any given time. The banks can do quite well loaning money they never had and collecting even trivial interest from said money.