Mortgage rates have hit historic lows. But does that mean you should refinance? As with many personal-financial issues, it depends. Check these sites for guidance on your own situation.
Things to know. Bankrate.com offers "four things you should know before you refinance." Actually, there are quite a few more than four in the fine print here. No matter how great the mortgage rates are, lenders remain uneager to sign up borrowers unless they can show a stellar credit rating and a good bit of equity in the home that's to be refinanced. Bankrate also is a good site for online calculators that help you figure out pretty closely what sort of payments you'll be making with a new loan. http://go.philly.com/refin1
Running the numbers. There are more calculators and advice at the site of FICO, the Fair Isaac Corp., which is the company that pioneered credit scoring in the 1950s. The tools here are meant to help borrowers estimate closing costs, and the wisdom of paying the extra fees, called points, to reduce interest rates. The opening page shows current rates and payments for fixed 30-year, 15-year, and adjustable-rate mortgages, and how they vary based on credit scores. http://go.philly.com/refin2
Smart owners. This four-minute video on YouTube called "Smart Homeowners Know When to Refinance," by personal-finance author David Bach, gives some basic pointers for deciding how wise it is for you to attempt a refinancing. Banks' new standards are stricter, but if you're current with your present payments, if you plan to stay in the home, if the new rates are at least a percentage point lower than your old rate, then you might benefit in a refinancing. http://go.philly.com/refin3
Excel tips. A short tutorial at eHow.com explains how to set up a spreadsheet for figuring out if it really is time to remortgage. You'll have to know something about Microsoft Excel to begin with. If you do, the article supplies the formulas that will give you a simple spreadsheet capable of doing most of the arithmetic to help you decide. http://go.philly.com/refin4
