Consolidate and Refinance Your Mortgage for Huge Savings
Submitted by:
leigh67 11/14/2008 10:38 PM
I am sure everyone knows this, but I feel like now more than ever it is important to take a second look at the terms and interest rate of your mortgage. Interest rates are still super low--5.75-6%!! I was able to buy a house when you could put 10% down, a main mortgage for the 80% of the purchase price and a second loan for the other 10% down. Because of how these loans are set up the interest rate on the second loan was 7.125% and the main was 6.5%. After 3 years, I decided to look into consolidating and refinancing and it has saved me a bundle. I was able to consolidate the two loans at a rate of 6.125% which has saved me over $500 a month on my mortgage payment!! Which quickly recoups the cost to refinance--closing fees were about $1600. I did this last May and am already thinking about refinancing as rates continue to drop. One rule of thumb that I heard was if interest rates drop 1% lower than what you are currently paying it is worth it to refinance. A note, make sure you fully understand the terms of the loan and all the refinancing fees associated before you sign. I was able to negotiate down the closing fees. It never hurts to ask!