One of the Best Times to Refinance

For those of you who are seeking ways to recover some of the money spent over the holidays, refinancing may help. The situation in Europe has caused mortgage rates to drop to some of the lowest rates available in 60 years.  With rates in the low to mid 4% range, it may be hard to envision rates getting much lower.  The Wall Street Journal reported that 30-year mortgage rates hit 4.05% in December.  If a person had a $300,000 loan at 6% and refinanced at that rate, they would have saved $128,880.  That is a substantial savings.  The following chart shows the savings that a person could achieve from refinancing a $300,000 loan at various interest rates.

Loan Amount

Interest Rate

Payment

Savings Over 30 Years From Refinancing 6% Loan

$300,000

6%

1798

0

$300,000

5.50%

1703

$34,200

$300,000

4.50%

1520

$100,080

$300,000

4.05%

1440

$128,880

This information does not include any fees that may be charged by the broker.  Be sure to look at the Annual Percentage Rate or APR.  This rate will include any extra fees that may be charged.  Even if the APR ends up at 4.5%, the person in this scenario would still save over $100,000 over the life of the loan.

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