Keep an Eye on Mortgage Interest Rates - Even if You Already Have a Mortgage!
If you’re someone with an affordable mortgage that you can easily handle and feel that your interest rate is the best it’s ever going to be, then congratulations are probably in order. Not many can say that they have a comfortable house payment that they never think twice about.
For everyone else, however, it pays to keep an eye on mortgage interest rates even if you already have a mortgage and have been paying on it for years. Why do we say this? The answer lies in refinancing, and whether or not you can actually save yourself thousands of dollars over the life of your mortgage by doing so.
What are some things to look for in mortgage interest rates, and who should be concerned with them and the option of refinancing?
Those With Adjustable Rate Mortgages
A lot of home foreclosures have occurred over the past few years, as many people know. Often these foreclosures have been people with adjustable rate mortgages whose interest rate reset to an amount that made their monthly payment out of their reach. If you have an adjustable rate mortgage, it pays to keep an eye on mortgage interest rates, especially as your adjustment date nears.
Will it go up or down? If it goes up, what will this do to your monthly payment? Typically, mortgage interest rates go up, and when that happens, the monthly payment goes up as well. If it’s just a few dollars, that may not make much of a difference with you, but sometimes monthly payments go up by half over again!
If you have an adjustable rate mortgage and have noticed that your mortgage interest rates continue to climb every single adjustment period, you may want to consider refinancing to a fixed rate mortgage. Even if the fixed rate you get right now is a percentage point or two over your current rate, it may be lower than the rate you’re going to get next year or a few years down the road.
Do some figuring and calculating and see how much your mortgage interest rates have climbed, and see what your interest caps are according to your loan papers. If the caps will make your rate too far out of your reach, then it may be time to refinance right now. Remember, your bank or lender can decide mortgage interest rates as long as they are within those caps, so don’t be surprised if every adjustment period means an increase in payment.
Your Breakeven Point
Even if you have a fixed rate mortgage, you may do well to look at current mortgage interest rates. If you can save thousands of dollars over the life of your loan by refinancing, this may make refinancing worthwhile right now. Your breakeven point is how long it takes to recoup the cost of refinancing with your new savings. Calculate that now, and see if the lower mortgage interest rates being offered today may save you thousands in the next few years.
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