Sure, mortgage rates aren’t as low as they were a few months ago, but they’re still at rockbottom levels.
The ever-popular 30-year fixed mortgage stood at 4.77 percent last week, per government mortgage financier Freddie Mac, slightly more than a half point above its all-time low of 4.17 percent achieved last year.
But the uptick shouldn’t derail everyone from taking advantage of a refinance, assuming they have the necessary credit score and home equity to get the deal done.
After all, a study conducted by Credit Suisse back in March found that 37 percent of borrowers with 30-year fixed mortgages still had interest rates above six percent.
In other words, there are millions of homeowners out there still paying too much for their mortgage each month.
Let’s look at a quick example:
Loan amount: $300,000
Current mortgage rate: 6.25%
Current monthly mortgage payment: $1,847.15
Refinance rate: 4.75%
New monthly mortgage payment: $1,564.94
Total monthly savings: $282.21
As you can see, if your mortgage rate is still above six percent, and you’ve got a good credit score (what is a good credit score?) and decent equity in your home, you might be able to save some serious cash each month.
If you think you may be eligible, be sure to shop around at local banks, mortgage lenders, and also consult with a few mortgage brokers.
Always do plenty of shopping to ensure you obtain the best rate and beware of costly fees that can offset any savings associated with your refinace!