Homeowners Rush to Refinance

By: Mary Taing

(ABC 6 NEWS) -- Resolve to save money in 2009.

Now, you can.

Just this week mortgage giant Freddie Mac says the cost of borrowing has slid more than 1 percent from this summer, averaging 5 percent.

That's the lowest recorded rate since the survey began 37 years ago.

With the stroke of a pen Chad Boehamke and his wife Regina are saving money.

"We had 6,7,5,8 percent so we decided to try and get a lower interest rate and also make it into one loan," says Chad Boehamke.

With interest rates near record lows homeowners are rushing to refinance.

And it's keeping mortgage companies really busy.

"Refinances have probably been at an all time high for the last couple years," says Todd Satre.

There are a few things you should know before making this move.

Todd Satre of Premire Mortgage says sometimes a low interest rate won't necessarily save you money.

"One place you can get the really low interest rate, but you might pay more money out of pocket in closing costs, whereas someone might have a little higher rate but they reduce their closing costs considerably," Satre says.

Also, ask yourself how long you plan to live in your home.

Because if it's not the home you'll be in for several more years refinancing might not be worth it.

Say hypothetically you save 200 dollars per month on your mortgage payment, but it cost you 4-thousand to do the loan, it's going to take 18 months roughly to recoup that expense," Satre says.

 the best thing is talk to a broker you trust, that way you walk away with a good feeling like the Boehamke's.

“We're saving at least 50 bucks every month so it's definitely a good choice for us," Boehamke says.

To make sure you're saving money at a time when every penny counts

According to Freddie Mac the average for a 30-year fixed-rate mortgage is at 5.1 percent.

That's down from 5 point 14 percent last week.

The average for a 15-year, fixed rate mortgage is at 4.83 down from 4.91.

And one-year treasury indexed adjustable rate mortgages stands at 4 point 85 percent, dropping a tenth-of-a-point from a week ago.


Source

It is right to think first before grabbing the opportunities because sometimes it will turned out paying the same amount whetheir having a low interest rates or withuot.