With interest rates as low as they are, it's a great time to buy a home. The cost of home ownership has dropped with the drop in interest rates. As great a time as it is to buy a home, it's also a great time to refinance your mortgage.
Because rates are so low, you can actually save a significant amount of money over the life of the loan. If you refinanced a $300,000 loan in April 2011, it would cost about $276,000 in interest. If you refinance in August 2o11, that same $300,000 loan would cost about $227,000 in interest. That is a huge savings!
Many people will say that they have already paid several years on their current mortgage and don't want to start over with a 30 yr loan. You don't have to – you can do a 15 yr, a 20 yr or even a 25 yr mortgage. The other suggestion is to do a new 30 yr loan but keep making your current mortgage payment. If you keep making the same payment, you are paying extra on your principal every month and you will pay off your loan much faster!
Many people are refinancing to 15 yr loans because the rates are so much less. Your payment will be higher as you are paying it off much faster, but because the rates are so much lower, you may not have as large an increase in your payment as you expect. The interest you save will be huge!
The biggest issue with refinancing today is simply the property values. If you aren't sure what your home is worth, you can look at your tax value as an estimate, but also check some different real estate sites. Until you actually have an appraisal, you won't know for sure, but with rates as low as they are, it's worth checking into.
We don't know how long interest rates will be this low, but if you currently have a mortgage, it's worth a phone call to see what you can do!!