Mortgage Rate Refinancing

The decision to refinance one’s home is a colossal one; the reason being, refinancing does not automatically denote savings—sometimes people mistakenly refinance to mortgage loans with lower interest rates, but worse terms, which ends up costing them money down the road. Analyzing market trends and loan specifics immeasurably helps uncover the mortgage rate refinancing option that ends in savings.






Housing values, as a general trend, are up during the past decade. The national median housing value has increased from $101,100 to $119,600 from 1990 to 2000 (a positive change of 18.3%). National average interest rates for home mortgage loans, conversely, have been declining from highs of 9 or 10% during the economic boom of the 1990’s down to 2003’s lowly 5.5% for 30-year fixed loans. All this spells savings for Americans, who parlay mortgage rate refinancing into lower monthly payments, as well as unlocking money in the form of housing appreciation.






When does mortgage rate refinancing make sound economic sense? The general rule of thumb concerning overall savings on refinancing loans exhorts that homeowners should only consider it a viable option when current interest rates are 1 to 2% lower than existing interest rates. Closing costs, escrow and title fees, as well as appraisal charges account for the 2 percent rule. However, online lenders have stalwartly fought to eliminate hefty portions routinely associated with closing costs. The result? Mortgage rate refinancing is currently viable, in some cases, when present interest rates are 1% or less than existing rates.