For those of you who been very wise with your money prior and during the economic downturn there is a silver lining, mortgage rates. With the US dollar seeing a dramatic rebound and the EURO coming under a lot of pressure it has many investors fleeing to US Treasuries for security. With that it has caused bond and mortgage rates to drop to very low historical rates. If you haven’t checked out rates lately it looks like rates are at about 4.30% on the 15 year mortgage and 4.91% on the 30 year mortgage.
For example, by refinancing a $150,000 30 year mortgage from 6% to 4.91% you can knock more than $100/month off your payment. $899 – $797 = $102 payment reduction. Then if you take the $102/month savings and apply $102 extra per month towards principal than you can reduce your mortgage from 30 years to 23 1/2 years.
Here is a few great websites I frequent for finding out the latest on mortgage rates and some calculators for refinancing.
- Mortgage Calculator and Ammortization Schedule
- Will I save money by refinancing (calculator)
It may be a smart time now to look at refinancing your home, because if the US economy does see a recovery then more than likely inflation will be increasing and thus causing the Fed to raise interest rates. What other options are you taking advantage of now with the economic down?