With mortgage rates at near half-century lows, millions of homeowners have the opportunity to cut their rate by 1 percent or more.  Are you one of those homeowners and if so have you considered refinancing your mortgage in order to take advantage of this opportunity?

According to the Mortgage Bankers Association, few homeowners have seized this opportunity to refinance their mortgage at a lower rate.  They report that in spite of potential savings new refinance applications in January stood at their lowest levels in the past year.  Many homeowners have lost their jobs or are stuck in homes that are "underwater", making it difficult to gain approval for a refinance.  However, if you are in a position in which refinancing is an option then you should consider if doing so would serve your needs.

If your current interest rate is 6 percent or higher, you should look to refinance.  Generally, you will benefit from a refinance if your interest rate is reduced by at least 1 percent and if your new loan does not require you to pay points in order to obtain that lowered rate. In addition, refinancing is most effective if you plan to stay in the home for more than three years.  That is unless you can lower your rate by 2 percent or more, in which case refinancing would be most beneficial. And of course, the better your credit score the more you would be able to reduce your mortgage rate.

We do not know how much longer the Fed will leave interest rates this low, but as long as they remain at the current level you may have the opportunity to save thousands on your mortgage over the next five to ten years or more.  If you are interested in learning more about this opportunity, and if you would like to discuss your options further please contact us to schedule a time to meet.  We can discuss what options are available to you and what best suits your situation.  We look forward to hearing from you soon.

Sincerely,

Joseph M. Dowling, CPA                                 Sean M. Dowling, CFP