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Have You Reviewed Your Mortgage Lately?
Posted by V.K. [Mel] Melhado P.A. on Friday, February 9th, 2007 at 1:11am.With the mortgage rates again coming down, now might be an excellent time to review your current mortgage to see where you stand and whether it currently fits your needs. This past week, there was a dramatic drop in the rates, following a nearly two month rise. The 30–year benchmark dropped 11 basis points, (a basis point is one-hundredth of 1 percentage point), standing at 6.31%. It seems that the FED has shifted their attitude a bit at the end of January, when they left the short-term rates unchanged, feeling sustained inflation pressure.
Bankers will tell you that you should assess you mortgage and ciscumstances annually, and now would be a good time, especially if you have an adjustable-rate mortgage. In 2007, many of the 3/1 and 5/1 ARMs will be re-setting. Some will adjust as much as 5 percent, which will make a huge impact on a monthly payment. If someone is paying an interest-only payment, that can mean that, with the adjustment, their payment will double.
Today, many people are seeking to do cash-out refis, where the homeowner will take out a new mortgage for more than the original amount financed and will take cash out to pay for other things, like credit card debt, etc. Interestingly, many of these borrowers are paying a higher interest rate than their original amount. Cash-out refis certainly seem to be the king, at the moment.
If you are staying with your current mortgage, it is always a good idea to make at least one extra payment a year. People don’t realize that if they made just one extra payment per year, they would pay off their 30–year fixed rate mortgage in less than 25 years. Another tip is that if you have an ARM, stay away from the temptation of making the minimun payment, because most likely you are adding to the original amount owed.
Make sure that if you are in the market for a new mortgage, you shop around. Start with the internet, then talk to your local bankers to see if they have the same rates. Many times it can be better to deal locally if you can. In that way, should you have a problem, you can hop in your car and get it resolved.
V.K. [Mel] Melhado PA
Downing-Frye Realty, Inc.
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