What You Need to Know about Your Mortgage Refinancing Rate

The current mortgage refinancing rate for those individuals with outstanding credit history is near 5% at the time of this writing. While that is not a record low for mortgage rates, it isn’t too far off the mark. For anyone that asks me if this is the time to refinance your mortgage or home loan I must reply, although everyone’s situation is at the very least a little bit different, that yes, in general terms, I believe it is.

As I’m sure you have noticed I qualify that remark by saying that everyone’s situation is at least a bit different. There seems to be the misconception amongst some consumers that all mortgage refinancings are the same – nothing could be further from the truth. Even if you happen to spot some lower rates and have excellent credit you still must be on the lookout for fees that can eat into your savings wiping out any benefit that you have gained from those low interest rates.

Just to sum up, the mortgage refinancing rate is the rate that a bank or financial institution charges their customers to borrow their money. If for example you are to borrow on $150,000, you would then owe that lender that $150,000 which is known as principal, plus the interest agreed upon when you took out the loan. While the principle that you borrowed is the same amount that you will repay the interest charged on top of the principle is what the lender charges for using their money.

The mortgage refinancing rate is set based off of the prime rate. The prime rate is the rate at which banks charge each other to lend and borrow money and is determined by the Federal Reserve. You can find the latest mortgage rates by consulting the financial section of most major metropolitan newspapers and in business publications such as the Wall Street Journal.

It is important to realize that each and every loan is treated separately. While there are safeguards set up to ensure that the process is fair to all who apply, there are several determining factors that will go into the interest rate that you are charged. In the case of a refinancing you will also pay fees. Many don’t realize this but a refinancing is actually a brand-new mortgage but with different terms set to it.

Of course, the end goal is to lock in lower interest rates and to make your payments more affordable. The Internet is a great place to do some comparison shopping. You can also check out your local newspaper. You will find that many major banks and financial institutions will advertise in major newspapers and attempt to drum up new business by originating new loans.

Then as it was with your original mortgage, mortgage refinancing rate will be predicated upon your credit history, how long the loan is for, how much credit you currently have outstanding and how much you owe. There are many factors that go into determining the refinance rates that you will be charged so be sure to take your time and understand everything that goes into having a mortgage.