Livonia, Mich. – Jan. 23, 2004 – The refinancing boom is back on! This week mortgage rates dropped back down to 40-year lows, which is great news for the 45 percent of homeowners who could still benefit from refinancing.
Interest rates on 30-year, fixed-rate mortgages dropped to the upper five percent range this week. Interest rates also dropped on 15-year fixed rate mortgages to the lower five percent range. The payment on a 15-year loan will be higher than that on a 30-year loan, but homeowners could save thousands in interest over the life of the loan due to the lower interest rate and shorter term. (see example below).
Of course, if consumers know they will be in a home for less than five years, a five year adjustable rate mortgage may be the best way to go. Rates on those programs remain in the low-to-mid 4 percent range.
Approximately 45 percent of homeowners could still benefit from refinancing according to Quicken Loans chief economist Bob Walters.
“Anyone with an interest rate that is six percent or higher on a fixed rate mortgage should consider refinancing,” said Walters. “In addition, homeowners whose adjustable rate mortgages are currently in the adjustment period might also consider locking in these low fixed rates.”
Homeowners interested in determining whether they can benefit from refinancing can use the refinancing calculators in the Quicken Loans.com Refinancing Center.
Here’s an example of the difference between payments on a 30-year fixed rate mortgage and a 15-year fixed rate mortgage:
$200,000 home (consumer has $40,000 in equity; loan is for $160,000)
30-year, fixed-rate mortgage (interest rate is 5.75%)
* Payment is $934 per month
15-year, fixed-rate mortgage (interest rate is 5.125%)
* Payment is $1,276 per month
Consumers on the 30-year mortgage will pay $176,000 in interest. Consumers on the 15-year mortgage will pay $69,000. The lower rate and shorter term of the 15-year mortgage results in a savings of $107,000 for consumers. |
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