The traditional
answer to that question
is when interest rates
fall 2 percent below
your current mortgage
interest rate. However,
in recent years some
experts have argued that
refinancing may be
appropriate with a
smaller point spread.
Some weight is often
given to the length of
time the owner
anticipates holding on
to the property. If the
owner expects to keep
the property for at
least three or four
years, then refinancing
may be worthwhile.
While refinancing can
involve upfront costs,
in many cases it is
possible to roll the
costs of the refinancing
into the new note and
still reduce the amount
of the monthly payment.
Q:
What about these ads
for no-cost loans?
A:
In many states,real
estate regulatory
agencies are cracking
down on such
advertising. The very
term, "no-cost" loan, is
misleading because
borrowers are actually
paying a higher interest
rate in exchange for not
having to pay fees or
closing costs up front
when the loan is
secured.
A "no-points" loan is
one for which the lender
does not charge points
(one point is equal to 1
percent of the loan
amount). But there are
other fees involved in
no-point loans, as with
most loans.
Q:
Where do I get
information on
refinancing?
A:
For information on
refinancing, the
following booklet may be
helpful:
* "A Consumer's Guide to
Mortgage Refinancings;"
Federal Reserve Bank of
San Francisco, Public
Information Department,
P.O. Box 7702, San
Francisco, CA 94120;
call (415) 974-2163 to
order.
Q:
Can I refinance after
bankruptcy?
A:
Refinancing may be
prudent but could be
difficult after a
bankruptcy. If you're
considering bankruptcy,
you may want to go to
your current lender
first and explain the
situation. If you have
been current on your
payments, the lender may
be accommodating and
refinance your loan,
easing your financial
situation.
