Refinancing Your Home Could Seriously Save You Money, Tulsa Expert Says

Wednesday, July 29th 2015, 11:45 pm
By: Craig Day

Mortgage rates hit a seven week low this week, with some lenders offering below four percent on a 30-year note.

Refinancing can free up monthly cash flow, or going to a shorter term can help pay off your home much faster.

As a Realtor, Jennifer Wykoff keeps up with mortgage rates; and after seeing how many of her clients were getting great rates by refinancing, she decided to do it.

"At that time I was seeing three-and-a-half, fours, the difference between 30 year and 15 year, so I decided to call and get it done," she said.

In 2012, the average 30-year mortgage rate was historically low, in the low to mid 3s.

Now in 2015, experts like Jeff Moser with Fairway Independent Mortgage say, although up a bit since then, rates are still great.

"Historically, they're still fantastic. It's a great time to be buying a home," he said.

And it's a great time to at least look into refinancing your existing mortgage.

Wykoff is glad she did, she cut her mortgage rate by two percentage points.

"Dropped my note down to 15 years, and my payment was less than it was at 30," she said.

Moser said, "We like to see about a one percent variance in the rate, anything more than that is even better."

While he says that one point drop is a good place to start when considering a refinance, there are other factors to consider since every borrower's situation is different.

Conventional loans are very sensitive to credit scores - the lowest rates will go to people with a credit score of 720 or higher.

Having at least 20 percent equity in your home enables you to avoid paying private mortgage insurance.

Also, it may not make sense to refinance if you don't plan on staying in your home long enough for your monthly savings to cover your closing costs.

"When you jump to the 30-year loan, sometimes it jumps out to 24 months or so," Moser said.

A general rule of thumb is refinancing will cost you anywhere from three to six percent of the loan amount.

Moser said it's all about crunching the numbers to see if refinancing can Seriously Save you money, and keeping an eye on current interest rates.

"Interest rates are like gas prices, they constantly move, all the time, all day every day, and we wake up to something new every day," he said.

Wykoff said people shouldn't be intimidated about the refinancing process.

"It's really easy, and me being self-employed, mine can be even harder, but it was very easy," she said.

She plans to use the couple of hundred dollars she's saving each month to help pay for her children's college tuition.

If you decide to refinance and are trying to decide between 30 years, 20 years or 15 years, keep in mind that a longer term could give you more cash flow each month, but a shorter term helps to aggressively pull the principle balance down and builds equity in your home much faster.