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While interest rates have been inching up in the United States over the past couple of years, it is still a good time to consider a refinance of home loans. Refinancing home loan rates are still relatively low in comparison to historic mortgage rates over the last fifty years. While the U.S. is no longer seeing mortgage rates in the two to three percent range, good refinance home loans can be found in the six to seven percent range. They are still relatively easy to find and not too hard to attain.
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Why Refinance Home Loans Now? Even though interest rates are not at their absolute lowest, the industry predictions are that interest rates in the U.S. will continue to climb over the next few years. It makes a lot of sense to refinance home loans which are at a higher interest rate than what is available today. One major reason to refinance is always to lower your interest rate. Over the term of your mortgage if you lower your interest rate even one single point then you will see a massive difference in the amount of money you pay for your home in total.
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Another important reason to refinance home loans while home mortgage rates are
still low is to convert an adjustable rate mortgage into a fixed rate mortgage.
Any adjustable rate mortgage, or one with a large balloon payment due at some
date in the future, should now be converted to a fixed rate before the interest
rate climbs any higher. Back in the 1970s interest rates climbed and
mortgage rates went into the 12-16% interest range. The last thing you
want to do is get stuck
with an adjustable rate or a balloon payment, and have to refinance at
that kind of rate in the future.
Refinance Home Loans to Consolidate Debt?
Like most people today, you probably have a lot of credit card debt. By refinancing home loans while mortgage rates are still relatively low, you can take out some extra money from your home equity and pay off all of your higher interest debt. If you have a lot of credit card, or other debt that has higher interest rates than your potential new mortgage, this can be a great way to save some money each month. If you are paying 20%-30% interest you can move that debt to your mortgage and pay less than 10%. This can amount to a big savings over the next few years. Also, the added bonus of using your home equity is that your mortgage interest is tax deductible, which will save you even more money.
The one thing you should never do is to consolidate your student loans into your mortgage, if your student loan rates are lower than your mortgage interest rate. You only want to consolidate higher interest debt into your mortgage. With debt like student loans, you are better off leaving them as a separate bill you pay off each month and using the bulk of your money to pay off higher interest debts.
If you have an adjustable rate mortgage it really does make sense to consider refinancing while mortgage interest rates are still relatively low. It also makes sense to take out some equity and pay off your higher interest debt if you are looking at refinancing your home loan.
©2009 Best Refinance Mortgage Rates