BY TBO.COM EDITORIAL STAFF
February 6, 2009
Melissa Morris knows that refinancing can sometimes save big bucks. She refinanced two years ago to get out of a 14 percent adjustable-rate loan. She ended up with a 7 percent fixed interest rate and saved hundreds on her monthly mortgage payments.
Now, Morris is tempted to lock in rates, which most recently averaged 5.28 percent on a 30-year, fixed mortgage. With interest rates hovering near historical lows, she wonders whether she could get her payment even lower. "I'm looking into it," she said. "Refinancing the first time worked out great."
Dale Vermillion, author of Navigating the Mortgage Maze, recommends consumers first figure out how much their home is worth. He suggests Web sites such as www.cyberhomes.com and www.zilliow.com. If you don't have equity, don't bother, he said.
Vermillion also recommends homeowners avoid refinancing for a longer loan term. For example, if you've been in your home five years and then refinance for a 30-year loan, you could end up paying more for the loan. "The bottom line is that situation is the same," he said. "Homeowners should talk to their lenders and find out what the new payment and term would be."