Interest Rates are Right for Refinancing
A Home Buying Article Contributed by Elizabeth Fox-Wise
Historically Low Interest Rates Make It a Great Time for Refinancing
The 2000s have seen record low interest rates, causing many consumers to consider refinancing. Refinancing is when you take out a new loan with the purpose of paying off an old, existing loan.
The most common reason for refinancing is to secure a lower interest rate on your loan. Lowering your interest rate by just a couple of percentage points, can save you thousands of dollars over the life of the loan.
Economists are predicting interest rates to rise by the end of the year, and to continue rising through 2005. For this reason, consumers are refinancing their loans at record rates, trying to beat the interest rate increase by securing a low rate fixed loan.
You can look into refinancing any loan that you carry, but the two most commonly used refinancing loans are on houses and vehicles.
Refinancing Your Mortgage Can Save You Hundreds of Thousands of Dollars
Since your home is a very expensive purchase, the interest rate on your mortgage will have a lot to do with the total amount that you spend for the home if the mortgage is carried to full term. Say for example you purchase a home for $150,000 with a thirty year mortgage at an eight percent interest rate, refinancing the mortgage loan at a five percent interest rate will save you over $100,000 in the total cost of the house at the end of the thirty year term.
In 2000 interest rates on home mortgage loans began dropping. Homeowners that were holding high interest rate mortgages, began refinancing at lower rates. Economists were predicting interest rates to climb back up, but in 2001, 2002, and 2003 they stayed low and had some more decreases. Each decrease in the rate brought about another spurt of mortgage refinancing.
In 2004, the Federal Government, in an attempt to spur a sluggish economy, dropped the interest rates a few more times and mortgage rates hit an record low. Many of those homeowners who held off on refinancing their home loans, couldn't resist the rates and another rush of refinancing hit.
Refinancing Your Auto Loan Might Be Another Strategic Move
The next big expense that many people have is an auto loan. Refinancing your auto loan to a lower interest rate could save hundreds or thousands on the total cost of the vehicle, as well as lower your monthly payments.
Many people are carrying car loans for as high as eleven percent. At the moment, if you look around, you might be able to get an automobile refinancing loan for as low as six percent. There are several lending agents which specialize in automobile loan refinancing and a search on the Internet should get you a few to compare.
The low interest rates can not last forever. Economists have predicted the rates to rise in the past, and it didn't happen. But we all know that it is coming. With the Presidential Election now over, it may be sooner than we would like, and the refinancing craze will be nothing more than a distant memory as interest rates continue to rise.
