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Refinancing Mortgage Rates – A look at bank mortgage rates
With the current very low bank mortgage rates, if you are a homeowner, you should consider refinancing your mortgage to take advantage of the ability to reduce your monthly payment and total interest paid over the lifetime of your loan.
You may also look at the current loan rates if you are finding mortgage payments difficult to meet or have had a financial situation such as a lay-off from work, which will affect your income and ability to meet your expenses. Refinancing mortgage rates are subject to change, however, there is still things you should consider when choosing interest rates.
FHA Refinance Rates versus Conventional Mortgage Rates
FHA does not set the bank mortgage rates, the lenders participating in the FHA programs do and these rates are based on several factors which includes the amount of profit the lender feels they need for granting these loans to you. However, because the FHA guarantees to the lender that if you should not repay your FHA mortgage, they will. For the lender, this reduces the risk of granting you the loan. So, lenders offer lower interest rates under the FHA refinancing program. Lower interest rates mean reduced payments and over many years, this could amount to a lot of savings.
Conventional Mortgages do not have the FHA guarantee, thus there is the potential for more risk and these lenders feel the need to charge a higher interest rate. It is best to check out both types of mortgage rates with several lenders when refinancing and remember that even FHA rates may differ between lenders.
The Types Of FHA Refinancing Mortgage Rates
When you have been approved for a mortgage refinance under one of the many FHA programs designed especially for this purpose, you will also be given a choice of refinance rates and terms. You will be able to select fixed rate loans where your interest will not increase or decrease, no matter what interest rates do. Your rate is locked in for the term of the loan you choose.
This is good if interest rates go up, could be bad if rates go down lower. However, your payment will stay fixed and so you have the stability of a fixed payment.
Consider the Current Refinance Rates – Should you look at an ARM?
If interest rates were to go down lower, you also may qualify to refinance again to the lower rate, at a cost. If you were to chose an adjustable mortgage rate or what is considered a variable rate, your interest rates could go higher or lower, depending on what interest rates do over the term of your loan.
Your payment amount will need to be adjusted from time to time to take the interest rate changes into consideration. At this time, variable rates or ARM’s are lower than fixed rate and those believing rates will stay low for awhile may take these rates.
When choosing ARM’s, you also have the ability to refinance to a fixed-rate at a later date. It is best to discuss with an FHA lender, the pros and cons of the various rates and costs to refinance if you wish to change rates at a later date.
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November 5th, 2011 at 4:50 pm
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November 16th, 2011 at 5:00 pm
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