Homeowners weigh refinance options

12.30.08
By Timothy Jones

Record-low interest rates on mortgages may be tempting new buyers to the market, as well as causing existing holders of home loans to consider refinancing.

An article in the New York Times explores how many people who have already paid down a significant chunk of their mortgage may be uncertain whether switching to a new deal would actually be worth it.

After five or six years of making mortgage payments, homeowners generally see their overall debt diminish and their monthly payments grow smaller, explains financial adviser Richard E. Austin.

However, he tells the news provider that the potential savings from a lower interest rate can definitely be beneficial to many households over the long term.

He and other mortgage advisers recommended that if someone is planning to maintain the new home loan for at least 27 months, it would probably be in their best interest to refinance to take advantage of the current low rates.

The most recent figures from Freddie Mac reveal that rates for 30-year fixed-rate home loans fell to 5.19 percent, which represents the lowest level in the 37 years that the company has been collecting such data.

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Refinancing a home loan can yield significant savings