Web Wealth: With rates low, think about refinancing a mortgage

Posted: June 04, 2012

Refinancing is making up the majority of new mortgages right now, and with mortgage rates at historic lows, you may be thinking of jumping into the pool. These sites offer guidance.

Ask the "mortgage professor." The details of refinancing — and options that many borrowers never get to hear about — are explored here. Example: Instead of getting a new mortgage, would your current mortgage holder modify your existing loan by lowering the rate? Who would even know to ask? The professor is Jack Guttentag, professor of finance emeritus at the Wharton School of the University of Pennsylvania. He also covers some of the scams to watch out for in the refinancing world. http://bit.ly/JRFfC4

The refinancing page at Bankrate.com gives an overview of mortgage and refinancing rates and has calculators to help you decide whether refinancing is a good idea, or whether a 15-year loan is better for you than a 30-year mortgage. In addition, a "mortgage refinance break-even calculator" tells you how long — if you refinance a mortgage — it would take to see actual savings, considering closing costs and other expenses. In many cases, it can take several years, even at the current low rates. http://bit.ly/KxwdrK

A consumer guide to mortgage refinancing , published by the Federal Reserve Board, is an easy-to-follow FAQ on the subject. It explains why refinancing may not be a good idea. For example, refinancing might lower your monthly payment, but it might also extend your repayment for many more years than if you had not refinanced. The page also details the many fees that lenders may tack on to a refinancing that could spoil the savings. http://1.usa.gov/KQR9J2

At the Guide to Lenders website , writer Richard Barrington outlines ways to streamline a refinancing. Start with knowing yourself — understanding your reasons for wanting to refinance — and define your own parameters, such as what rate you intend to get and the length of the loan. He also reminds readers to find out right away whether the current mortgage has a prepayment penalty, and to ask whether the new loan terms include such a penalty. That’s a limitation you’ll want to avoid. http://bit.ly/Mf3VVI

Contact staff writer Reid Kanaley at 215-854-5114, rkanaley@phillynews.com, or @ReidKan on Twitter.

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