Photo by: Rev Dan Catt
I love my credit union. Not only do I get higher interest rates on my savings than regular brick-and-mortar banks, it also is not being affected all that bad with the credit crunch.
So, today, I get a call from a friend in the mortgage loan department at the credit union where I hold my mortgage asking if I want to take advantage of the new rates. She presented me with three options:
- Perform a “loan modification” which would reset my current loan to 5.625% and would cost $250 to execute.
- Perform a “streamline refinance” which would refinance my current loan to 4.875% and would cost around $575.
- Perform a traditional refinance, roll my home equity (currently at 8.375%) back into my mortgage, and roll the closing costs in all at 4.875% with closing costs of around $2,000.
I calculated out the savings for all the options and determined that option #3 was my best bet. My current mortgage + home equity payment is near $1,200. The new mortgage’s payment will be around $930. That amount is even less than my original mortgage and provides a savings of more than $250 each month. So once we execute the refinance, we will “pay ourselves back” in less than 10 months for the cost of the refinance and the rest is pure savings.
If your credit is sound and your house has a decent amount of equity, you really owe it to yourself to contact your bank and see about getting a refinance right away. The rates don’t have much farther to fall, so today may be your best possible rate. Strike while that iron is hot!
{ 2 comments… read them below or add one }
Not only are those great rates but those look like great fees too! My brother is trying to raise up the money and start searching for a home. The rates are low AND housing prices have dipped a little bit. He’s one of those twenty-somethings that has his stuff together.
Doesn’t it feel great to free up money to use on other goals like the baby, continuing your remodeling and putting together a great website?
–mark–
Congrats on the huge savings. We’ve been wanting to refinance, but we are planning on building next year. I wish we could lock in rates now! We’re just hoping that they’ll stay below 6% for the next year.