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Refinancing mortgage to cut interest
Save money
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With lower interest rates on home mortgages, it’s possible that refinancing your loan could save you money each month. If the prevailing interest rates are a full percentage point below the rate you currently pay, it might be in your best interest to refinance.
The first step is to look at your credit history. It used to be that a FICO score of 720 was enough to get you a good interest rate on a mortgage. Now you could need a score of 740 or higher.
If your FICO score is good, determine if it’s financially worth your while to refinance. Go online or consult with a lender to determine just how much you’d save each month.
You’ll have to hunt for a lender, and it might be difficult to get in to see one right now because of the number of people refinancing.
You’ll pay fees and closing costs associated with the loan. Do the math with a lender to find your best option and determine how long it will take to pay off those fees. If you save $300 every month by refinancing and the fees are $3,000, it would take you 10 months to pay them off.
You’ll need some equity in your house. Being upside down (owing more than the house is worth) will likely nix a refinance deal.
You’ll need to prove your income now. Gone are the days of no-doc loans where you could put down any figure you wanted and nobody would check. Now they want to know for a fact that you earn enough to repay the loan.
Don’t be surprised if you’re turned down once or twice. If you really want to refinance, keep looking.
Two points to consider:
1. Do you plan to stay in the house long enough to recoup the closing costs and make a refinance worthwhile?
2. If you need to move and sell your house, will there be a pre-payment penalty that could cost you thousands of dollars to retire the loan?
Beware choosing anything but a fixed-rate loan. Tens of thousands of homeowners ran into trouble when their mortgages reset to a much higher rate. With a fixed rate loan, you’ll know exactly what your payments will be for the life of the loan.

Uffington does not personally answer reader questions, but will incorporate them into his column whenever possible. Write to him in care of King Features Weekly Service, P.O. Box 536475, Orlando, FL 32853-6475, or send e-mail to
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