Is Your Current Mortgage Rate Higher Than 4.375%? Time To Make A Move

The majority of homeowners refinancing today are looking for one common net tangible benefit; a lower cost mortgage. Gone are the days homeowners had to refinance due to a variable-rate-payment change or strong inflationary factors. Everyone wants to save money, key is deciding when to make a prudent move at the right time. If you’re having a tough time deciding whether or not to pull the trigger on that long contemplated decision, use rate as the sole motivator. (Remember interest paid is function of total cost)

Why 4.375% is the benchmark rate to justify refinancing

The 4.375% Fannie Mae /Freddie Mac coupon is at the highest level of 30 year fixed bond pricing in the current economic climate. Put another way, the 30 year fixed-rate mortgage is the most coveted mortgage type consumers opt for, indirectly driving the flow of money, which in turns affects “thresholds” in the different coupons (i.e. different rates).

When compared to a 15 year fixed mortgage, pricing is substantially lower although not as many people can qualify when stacked up against a shorter term amortization schedule.

4.375% or higher represents an interest rate indicative of 2012 or even as early as 2011 (house occupancy a factor here), meaning opportunity is match your current loan to a market rate.

By remortgaging your current 30 year fixed at 4.625% into a new 30 year fixed with a lower loan amount (assuming principal pay down since date of original loan), you save $169 per month in rate and lower loan amount. Here’s the overall net tangible benefit-you’re saving $60.927 in interest or rather $169.24 in interest per month plus the $169 per month cash savings, providing a total refinance benefit of $338.48 per month, combo of payment and interest saving over time.

Mortgage Tip:One could always look at the fact that the actual payment change is $127 per month, while this is true, the interest savings cannot be ignored because the more interest that is paid, the longer it takes to pay off the loan. By reducing interest expense over time, you create home-equity (an asset) which could free up opportunities for later on.

Many typically shy away from a 15 year mortgage due to the higher payment and the subsequent higher income needed to offset the liability, but because the spread is lower on a new 15 year stacked against a 30 year, it could be more viable choice for some who may have overlooked program in the past.

*Rates discussed 30 year 3.75/3.891 APR, 15 year 3.0/3.125 APR)

Trade in your 30 year or 15 year mortgage

Do due to the sheer nature of today’s interest rate environment brought on by weak economic data, trading in your high rate loan for a new loan with a lower rate and payment is a smart move. Better your financial position with today’s market opportunities rather than tomorrow’s unknown. Start today by getting a complementary mortgage rate quote.

Posted in:

RELATED MORTGAGE ADVICE FROM SCOTT SHELDON

"A concerned homeowner holding mortgage documents in front of a house, with fluctuating interest rates represented in the background, symbolizing the uncertainty and risks of refinancing."

The Hidden Risk of Lower Interest Rates: Why Refinancing May Not Be as Simple as It Seems

The Hidden Risk of Lower Interest Rates: Why Refinancing May Not Be as Simple as…

"Illustration of a human figure representing the Federal Reserve, holding large scissors and cutting a red percentage sign symbolizing an interest rate. Surrounding the figure are individuals representing homeowners, business people, and families reacting in various ways to the rate cut, with a city skyline in the background, featuring banks, homes, and businesses."

“Why Federal Reserve Rate Cuts Don’t Directly Lower Mortgage Rates”

Why Federal Reserve Rate Cuts Don’t Directly Lower Mortgage Rates When the Federal Reserve announces…

"A person standing in front of a 'For Sale' sign outside a suburban house, holding a clipboard and looking uncertain, reflecting hesitation about buying a home. The house has a well-kept lawn and a clear blue sky in the background, symbolizing the decision-making process in home ownership."

4 Signs You’re Not Ready to Buy a House

4 signs you’re not ready to buy a house when it comes to purchasing a…

Sold suburban home with a 6% mortgage interest rate sign, reflecting current real estate market conditions.

Why Housing Prices Will Rise: Understanding Interest Rates and Market Timing

If you’ve been sitting on the sidelines, waiting for the “perfect” time to buy a…

View More from The Mortgage Files:

1 Comments

  1. […] followed by additional home improvements and marketing of the home. If you are thinking about, refinancing your mortgage, or selling your house and need a recommendation to a professional real estate agent, contact scott […]



begin your mortgage journey with sonoma county mortgages

Let us make your mortgage experience easy. Trust our expertise to get you your best mortgage rate. Click below to start turning your home dreams into reality today!