With rates at historic lows, local mortgage advisors believe it's the time to think about refinancing.
A lot of holiday bargains for shoppers at the stores could be at least one upside to our struggling economy. The same goes for the mortgage industry, where homeowners could find some relief refinancing, thanks to historically low interest rates.
"I don't think people know the real savings that are out there," said Ted Shaw.
The savings for Shaw started about a year ago when he met with his mortgage planner, Georgie Cook of Traverse State Bank. He refinanced his loan at more than 6%. As he saw the rates continue to drop, he decided to do it again. Shaw discovered what a difference a year can make.
"The savings I could produce would be $175 a month, and over the term of a 30 year mortgage, it's $63,000 without any interest. If one could put that away every month, I would be way ahead of the game," said Shaw.
With rates at historic lows, Cook said many homeowners could benefit from a mortgage check up.
"One percent on a $60,000 loan is like 35 bucks a month. A $200,000 loan is $125 a month," said Cook. "So it depends on your loan amount, and the percentage of difference between what your rate is now and what you are going down to."
That means you do need to make sure the benefit of refinancing outweighs the cost.
"A lot of times people are watching the bigger media sources that are coming out of California or Florida or New York, where they are saying if it is within 1/2 a point or a point you should absolutely do a refinance. Well if you have a $60,000 loan amount, it's going to take 2, 2 1/2 points for it to be really worth the savings and the cost you are paying," said Cook.
Cook does advise some clients to wait. But she said you'll never know unless you make the phone call.
"It's a pretty painless process and in the end, it's going to save them quite a bit of money," said Cook.
The length of the refinancing process depends on whether you are an existing or new client, according to Cook. If you've worked with your mortgage advisor before, it should take a week or two to close. For a new client, it's about three weeks.
