Wednesday, November 22, 2017

Low rates spur homeowners to hurry up and refi

RECOMMENDED READING


They're knocking on the lender's door. As mortgage rates have tumbled to the lowest level in more than four decades, demand for refinancing has fired up homeowners nationwide.

Last Thursday, the average rate on a 30-year mortgage dipped to 3.37 percent from 3.39 last week, mortgage buyer Freddie Mac said. Two weeks ago, the rate reached 3.36 percent, its lowest level on records dating to 1971. Here's advice for people thinking about getting in on the action.

Why refinance?

Generally, the primary reasons are to:

• Lower monthly payments.

• Eliminate the unpredictability of an adjustable-rate mortgage by switching to a fixed rate.

• Free up home-equity cash for home improvements, college costs or other expenses.

• Shorten the loan term, say from a 30- to a 15-year mortgage, which can save thousands in interest payments.

Should you refi?

It's a personal calculation that varies. Generally, homeowners should look at how long they plan to be in their current home and whether the upfront costs outweigh the monthly savings.

"If you're not going to be in your home another one or two years, you're not going to recoup the closing costs," said Greg McBride, senior financial analyst with Bankrate.com.

"Everybody's situation is different," said mortgage consultant O.J. Vallejo. "There's no right or wrong answer. The only answer is what works for your family."

Some couples who refinance are looking ahead to retirement.

"Paying off the mortgage is now back in vogue," said Vallejo, especially for people in their late 40s or 50s who want to be mortgage-free at retirement age.

That doesn't necessarily mean they'll lower their monthly payment by refinancing. For example, a couple with a $250,000, 30-year loan at 5.25 percent three years ago would have been paying about $1,380 a month. If they refinanced their current balance to a 20-year, 3.5 percent loan today, their payments would increase slightly, to $1,405.

"Their payment goes up $25, but they just took seven years off their mortgage," said Vallejo. "That's almost $116,000 in interest. That's huge."

On the other hand, younger home­owners with kids might choose a 30-year mortgage when they refinance because they need the lower monthly cash flow to save for college or pay off debt. Or people with adjustable mortgages due to reset to higher rates may want to lock in single-digit rates.

What you'll pay?

The mortgage rate you'll be offered depends on numerous factors, including your credit score, loan amount, loan-to-value ratio (how much you owe compared to the home's appraised value), length of your loan term and type of home (rates on condos, rentals and vacation homes are typically higher.)

Lots of mortgage ads promise "no-cost" loans. According to some lenders, that's a misnomer.

"It really means 'no cash out of pocket,' " said Vallejo. "There's no free lunch."

Comments
David Cassidy … rest in peace

David Cassidy … rest in peace

David Cassidy was absolutely one of the biggest teen idols of the 1970s. From his lofty perch with TV's The Partridge Family, he was perhaps – along with the Brady boys – among the first male role models for kids like me who grew up glued...
Updated: 1 hour ago
Watch the unseen footage in ‘Planes, Trains and Automobiles’ trailer

Watch the unseen footage in ‘Planes, Trains and Automobiles’ trailer

Can we all agree that John Hughes' Planes, Trains and Automobiles is the ultimate Thanksgiving movie? (And maybe actually his best movie of the '80s? Think about it.) And though I'm sure many of us will be watching it again this holiday weekend, when...
Updated: 1 hour ago
Why Democrats feel Miami-Dade is moving their way

Why Democrats feel Miami-Dade is moving their way

MIAMI — Miami-Dade County has long been a crucial region for Democrats' hopes of winning races in Florida. But today, the county's Democratic lean is becoming stronger than ever.Both Al Gore and John Kerry won Miami-Dade by about 40,000 votes. ...
Updated: 1 hour ago
When to watch ‘Rudolph,’ ‘The Polar Express,’ ‘A Christmas Story Live’ and more holiday specials

When to watch ‘Rudolph,’ ‘The Polar Express,’ ‘A Christmas Story Live’ and more holiday specials

'Tis the season for a TV schedule packed with holiday specials and Christmas classics.We've already been seeing Christmas movies and commercials since early November, but the days following Thanksgiving are when all the networks kick into high gear.F...
Updated: 10 minutes ago
NFL Week 12: Tampa Bay Times staff picks

NFL Week 12: Tampa Bay Times staff picks

Happy Thanksgiving! It's already week 12 of the NFL season, and the football feast is set to begin. It all starts at at 12:30 p.m. Thursday, when the Lions try to win their fifth straight Thanksgiving Day game against a Minnesota team out to bec...
Updated: 6 minutes ago

AP Top News at 10:49 a.m. EST

AP Top News at 10:49 a.m. EST
Updated: 3 minutes ago
Nick Carter 'shocked,' 'saddened' by singer's assault claim

Nick Carter 'shocked,' 'saddened' by singer's assault claim

Nick Carter says he's 'shocked and saddened' by the accusations made by a singer who said he raped her about 15 years ago
Updated: 3 minutes ago
The Latest: 2 groups that dumped Moore not reconsidering him

The Latest: 2 groups that dumped Moore not reconsidering him

Two Republican groups say they have no plans to support Alabama Republican Senate nominee Roy Moore after President Donald Trump all but endorsed him
Updated: 3 minutes ago
The Latest: UK says war criminals can't outrun justice

The Latest: UK says war criminals can't outrun justice

British Foreign Secretary Boris Johnson says the genocide conviction of Ratko Mladic shows that "those who perpetrate atrocities cannot outrun justice"
Updated: 3 minutes ago
Michigan gymnastics doctor pleads guilty to sex charges

Michigan gymnastics doctor pleads guilty to sex charges

A sports doctor accused of molesting girls while working for USA Gymnastics and Michigan State University has pleaded guilty and will face at least 25 years in prison
Updated: 4 minutes ago