Monday, March 12, 2012

Should you Refi?


If you don’t mind, let me beat a dead horse.
Mortgage rates are at or near record lows and you could save a ton of money by refinancing.
There. I won’t say it again because I know how cliché and annoying it is to talk about how much money you can save by doing “X.”
The funny thing is I tell my family the same exact thing, though they don’t bother looking into refinancing either.
They bring it up to me here and there, but don’t do much beyond that.
And you can only tell someone something so many times before you give up.
Perhaps this explains why there are millions of homeowners out there with mortgage rates well above current rates that are indeed “refinance able.”
Don’t Have the Time to Refinance?
But for some reason, they haven’t bothered looking into a refinance. Maybe they don’t have any spare time to do so? Or it could be that the task is seemingly so daunting that they avoid it altogether.
Or maybe they don’t want to deal with a shady mortgage lender or a crusty mortgage broker?
The reasons are probably endless, but it still blows my mind that more homeowners don’t take action, considering “how much money you can save!”
It could just be that it sounds so darn “sleazy” to refinance, given all the negative attention the mortgage industry has received over the past five years.
So, how many homeowners are actually missing out?
Well, a couple months back a company named Core Logic noted that twenty million borrowers with positive equity, or 53 percent of all “above-water borrowers,” had above market mortgage rates.
They defined an above market mortgage rate as 5.1 percent (or higher), which is more than a percentage point above current rates for the popular 30-year fixed-rate mortgage.
Pretty surprising, no? I thought the number was high, considering all the news about the “record low rates” that seems to permeate the airways.
But no, many of us still don’t bother, and instead continue making inflated monthly mortgage payments.
All that said, it doesn’t make sense for everyone to refinance all the time. Like anything else in the world, it can be good or bad, depending on your unique financial situation and future plans.