Digital News Report – Now that rates are very low homeowners are considering refinancing their homes again. Besides refinancing, which is basically replacing one loan with another, there are other options including a home equity line of credit and a second mortgage.
The average interest rate on a 30-year fixed rate mortgage is slightly higher this week at 5.11 percent. Last week that rate on Monday was 5.02 percent. The rate on a 15-year fixed rate mortgage is unchanged at 4.37 percent. The rate for a 5/1 ARM (adjustable rate mortgage) is higher at 3.99 percent. Last week that rate was 3.90 percent.
There are variables to be considered. Do you have any equity in your home? According to Don Taylor, Ph.D., CFA, CFP writing for Bankrate, homeowners are unlikely to get any money unless they have equity.
But there are costs associated with refinancing. “The closing costs for a home equity product are often substantially less than those associated with a first mortgage, giving it an advantage over a cash-out refinancing,” Taylor said. “Nationwide, the average origination and title fees on a $200,000 mortgage in 2009 totaled $2,732, according to Bankrate’s annual survey of mortgage closing costs.”
Even a remodel project will cost money above and beyond the interest rate. Homeowners need to consider these costs before signing on the dotted line.
By: Tina Brown