Should I Refinance?

Despite recent upticks, today’s interest rates (in the range of 5.50% for a 30-year conventional loan) are still pushing a level virtually unseen in the last 45 years. So, where are they headed now? Well, we don’t know for sure. However, market consensus indicates they should remain relatively stable for a period of time. Even so, they do tend to bounce around (up and down) during the course of just about every 48 period…

So, what should someone who wants to buy or refinance do? Let us answer this way…

Let’s say a borrower has a $200,000 mortgage balance bearing 6.50% interest over 30 years. Currently, the principal and interest portion of his monthly payment is $1,264.14, and he has the opportunity to refinance at 5.50%. Let’s also assume the borrower is hoping rates will drop to 5.25%, and he doesn’t intend to refinance until they get there. At 5.50% (his “bird-in-the-hand”), his monthly payment would be reduced by about $130.00 to $1,135.58, and, at 5.25%, it would be reduced some $31.00 more to $1,104.41.

See what I mean? By waiting to try to save an extra $31.00 per month, the borrower risks rates moving in the other direction… Hope this helps.

EchoPoint Mortgage Company/CSW Home Loan
Dallas, TX
info@cswhomeloan.com
www.cswhomeloan.com
A service of EchoPoint Mortgage Company