If you haven't refinanced your mortgage lately, you're not alone.
In fact, Consumer Reports says that about three of five homeowners with mortgages pay interest rates that are higher than today's bargain rates, according to the Home & Family Finance Resource Center.
But it's a new year, and it's not too late to take advantage of the rates, which are near a 50-year bottom. On Wednesday, Dupaco Community Credit Union's 30-year fixed-rate mortgage was 3.875 percent, while the 15-year fixed-rate loan was 3.25 percent.
"It's worth scheduling an appointment to take a look at refinancing options," says Jeann Digman, vice president of mortgage lending at Dupaco. "It doesn't cost anything to review the figures."
If you're eligible for a lower mortgage rate, you might benefit by:
- Reducing your monthly payment.
- Reducing your loan term. "We've done a lot of 15-year fixed mortgages and have been able to help them make about the same payment they were making at a 30-year fixed rate, so that saves them quite a bit," Digman says.
- Working with someone locally when you have questions about your loan.
But know that there are fees involved - on top of the lender's traditional closing fees. Fannie Mae, for instance, is charging fees based on borrowers' credit scores, loan-to-value ratio (the loan amount as a percentage of the estimated appraised value of the property) and the purpose of the loan, Digman says.
"Typically most everybody has to pay a quarter percent, one-time fee based on their loan amount," she says. "If their credit score is lower than 720, their fee starts to increase."
If your credit score is lower than you had anticipated, don't immediately disqualify yourself. Digman says her staff has helped several members by reviewing their credit history and offering ways to improve their score.
"We've said, 'These are the things you need to do to get your score up,'" she says. "Rates have been holding steady, so they've been able to come back in a couple of months, and their fees have decreased because their credit scores have increased."
By Emily Kittle