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What
will refinancing do for you?
By Michael
D. Larson • Bankrate.com
Lower monthly payments. More available
money to pay off other debts. Protection against future job losses.
Shorter loan terms. Lower overall interest costs. Less interest
rate uncertainty than adjustable rate mortgages provide.
Refinancing can offer people all
that and a bag of chips. But what's most important to homeowners
today? Does refinancing make sense for many of them? How much can
they save, and what kind of loans should they be considering? What
do they hope to accomplish?
"Rates have pretty much dipped
down to a low that we haven't seen in a long time," says Pamela
Capo, senior loan officer at Competitive Mortgage Services Inc.
in Atlanta. "People are looking at the lowest monthly payment" they
can get.
"I had somebody two weeks ago already
at a $150 savings a month and another couple is saving $480 a month
and that's a big deal."
We interviewed several consumers
and lending experts to find out what borrowers are doing. The borrowers
agreed to share their financial data with us, and we provided it
to mortgage lending professionals. They, in turn, analyzed the numbers,
ran some calculations and came up with practical advice about how
these homeowners might want to proceed.
By studying these examples and
the pros' advice, mortgage hunters will better educate themselves
about the lending process. That should make it easier for them to
decide if they too should take advantage of today's low rates and
refinance.
The
"Farewell To ARMs" refinance
Like tens of thousands of other borrowers who took out ARMs after
rates started climbing in early 1999, the Andersons decided to
refinance their Minnesota townhouse. Though their new fixed rate
won't be much lower than the rate they're currently paying on
their ARM, they will save some money and eliminate the uncertainty
of a variable rate.
The
"Term Shortening" refinance
Kelley and Brian MacKay purchased their
home during the mid-1990s using a Department of Veterans Affairs
loan with no down payment. Seven years later, they're looking
to refinance to cut their monthly costs and reduce the term of
their loan.
The
"Pure Savings " refinance
Tom and Sandee Alo want to save at least
$250 a month. It's a relatively lofty goal, given their loans
are only seven months old. But depending on how they proceed,
it is possible.
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