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Happen again mortgage rates for thirty year fixed loans -- to a record low last week so I think you drop even further or is now the time to refinance even if you party done -- In today's take charge consumer protection segment I wanna take a look at what you can -- -- to save the most on your mortgage.
And joining us now is real estate attorney Sherry all ascendant Gerri great to have you back and of course we have to have you back disease rates do keep dropping lower.
Thanks for joining us.
Sure they're keeping us busy -- They are and I want I really even if you save a couple hundred dollars a month it might be worth it if you can avoid some of the costs of refinancing.
Tell us what is the equation to know whether or not it's time to do it or do it again.
Well of course Jamie -- big reason that people refinance is to get a lower interest rates or to shorten the term.
But the end of the day the goal is to pay less money -- interest one way or the other to the general rule of thumb is that if you can lower your interest rate by about 2%.
Then it's worth refinancing if you're going to stay in a home for about three years because again you'll lower the payment but you need enough time to make up for the closing costs 2% I mean that's it so 1% doesn't make sense to contact the bank and say I wanna pay less.
It really depends on your exact situation.
If you're gonna stay in the home for a long time and you and you have a larger than average sized mortgage then of course.
The numbers pay off at that point but.
You know the interesting thing now in this new economy is it rather focusing on that monthly payment and just getting the lowest possible monthly payment which is.
Of course what that a lot of folks into trouble.
-- more people are really focusing on the overall amount that they're gonna pay for that loan during the whole term.
Of of their homeownership sort of course how much is gonna end up costing them because oftentimes and you know with your own background -- in mortgages.
That oftentimes people end up paying more for the loan then they even paid for the home.
And that's me.
Good faith estimate that a lot of people ignore it comes and it says you -- a bar of this amount of money let's say a 100000 dollars and it's gonna -- -- Thirty -- 40000 dollars to do that so ultimately you're paying the total.
But right and total is reflected on the good faith best and explain to folks 'cause I think it's important that when you refinance oftentimes the amortization.
Not to use a big word.
But the amount of your monthly payment that goes to interest and principal changes so you could end up if you're not -- -- stay in the home.
The full thirty years or twenty years or even fifteen -- could end up paying a lot more at the beginning tell us why right right and that's a fact.
Or because remember when you refinance even if you're going from a twenty or thirty year -- to boot into a fifteen year -- When you refinance your actually re starting that term so if you had a thirty year -- for example and you only had twelve years left on it.
Even if you refinance into a fifteen Europe alone -- now -- actually be paying including interest for fifteen years rather than twelve years and with each monthly payment you pay down a little bit of principle.
So each time you do that you're actually paying less and less interest but at the beginning you're paying the highest rates of interest.
So often it's taken me three or four or five years before you really start making any kind of dent into that principal payment.
Now in terms of refinancing though folks who have a -- -- -- Freddie Mac loan are still the best off especially with that -- apartment 2.0 product because.
It allows anyone even if you're under water no matter how far underwater you are.
To refinance and of course being underwater and having that credit of the two obstacles holding most folks back from taking advantage of these low rates.
So I want to it.
-- people to take a look at their current mortgage statement and break down before they even consider refinancing because if you're paying like almost all principal principal.
And very little interest.
You're gonna reverse the situation if you refinance something to consider what about folks like you've been hard hit hard -- they've lost their job they have.
Questionable credit but they deserve a break -- are -- programs out there that can help them.
Well heart 2.0 actually is great if your loan is with Fannie Mae or Freddie Mac the only issue with heart is if -- in default and remember a lot of people intentionally defaulted to try to get modifications if you're in -- you have to be current on your mortgage for at least six months and you could not have had more than one mr.
late payment within twelve.
Months but that program extends until 2013.
So if you want to try to get that program you can get back caught up with your payments and you can still qualify you have until 2013.
The other thing Jamie is in some of the harder hit states there's actually a fun it was billion millions of dollars and very little used it's in nineteen states now it's called the hardest hit fund.
And you can call your state housing finance authority.
There a -- there's -- available to help you pay your mortgage while you're on or underemployed and there's also money available to help you get caught up on your mortgage once you become re employed.
The exact -- -- and qualifications depend on the state but it's definitely worth calling and -- no one's using that money.
You know -- why we started this take charge I wanted to help people because everybody's suffering in one way or another to just make the most of what they do have.
Thank you so much on this issue you're fantastic.
And I hope the people will make those calls and help themselves out thank you thanks for doing it great to see you.
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