HOWELL, Mich. — Home refinancing! Last year we heard a lot about those historically low interest rates. But if you missed the opportunity then, is it still worth pursuing now?
“I was able to refinance my home loan from 3.5% to 2.5%,” said Rachel James of Livonia.
“The current rate that I've been at was 3.625. I was able to lock in a new one at 2.9,” said Seth Giersdorf of Howell.
They are the real home re-fi stories of metro Detroit. Rachel James in Livonia and Seth Giersdorf in Howell - both looking ahead to more breathing room in the budget.
“There’s a lot you can do with the extra cash,” said Giersdorf.
Seth was just three years into his 30-year fixed-rate mortgage in his new Howell home. He did not pursue a refinance last year; in doubt, he could pull in a good rate, but soon changed his mind.
"I went into it thinking if I could save $100 bucks or more bucks a month it'd be worth it,” said Giersdorf.
It turns out the savings were far more, at $275 bucks a month, which he now plans to use to help pay down some family bills. Believe it or not, mortgage interest rates are even lower now than they were during the initial refinance boom last year.
“It’s generally 50 to 75 basis points lower,” said Andrea Mosher from Lake Trust Credit Union. “Now they are below 3 percent.”
At the time of this report, the 30-year fixed is at 2.79, and the 15 year at just 2.19. But mortgage data firm Black Knight says a record 19.3 million homeowners who could save money by refinancing, just aren’t doing it.
In a recent survey, nearly 32 % of you told me you’re not even considering it.
Andrea Mosher of Lake Trust Credit Union says the worry is often driven by misconceptions.
“There are people who are like, I don't want to extend my mortgage. I want to pay it off and move on,” said Mosher.
There is also a lot more flexibility in the rates when you are willing to shop around and negotiate.
“Why can one person get you a rate that another person can’t,” asked Ameera David.
“Sometimes it depends on what programs they offer,” said Mosher.
Different lenders can offer you different credits to offset the high closing costs, which can be anywhere from 2- 6 %.
“I was able to negotiate a little bit more in lender credit and get the rate where I wanted it,” said Giersdorf.
While there is a lot working in your favor but with closing costs high, but there are scenarios in which you should avoid refinancing altogether.
HERE’S THE REBOUND RUNDOWN
- Don’t do it if when factoring in those fees, if it will take too much time for you to hit the break-even point to start saving
- And don’t refinance if you plan to move anytime soon