||Ask Dr. Don
Dear Dr. Don,
We are currently paying 8.75 percent on a $55,000 mortgage and,
because we are in our 50s, we don't want to increase the size of
the mortgage when we refinance. I heard on the radio about a mortgage
loan where you could refinance at no cost if you refinance for one
point above the interest rate. I think the lender was called Arc
or Ark, but I can't find any information about this, nor can our
mortgage broker!! Can you please help?
With some help from my good friends at Google,
I found an Ark Mortgage Inc. in North Brunswick, N.J., and ARC Mortgage
in Crestline, Calif. What I'll tell you and what your mortgage broker
will tell you is that you don't need to chase across the country
to find a mortgage structure that meets your needs.
The thing to remember is that one way or another,
you'll be paying the closing costs and fees associated with the
refinancing. Bankrate's survey of closing
costs closing costs shows the different costs you will face
and how they range in value. If you chose a mortgage loan with no
closing costs, the costs will either be added to the loan balance
or added to the interest rate.
The no-cost loan, where the interest rate is marked
up to cover costs, makes the most sense if you plan on being in
the house for a short period, typically less than three
years. If this is the house you plan on retiring in, then either
capitalize the closing cost (add it into the loan balance) or pay
it at closing.
Use Bankrate's refinancing
calculator to determine how much you'll save in interest by
taking the new loan.
-- Posted: Oct. 29, 2001