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Written by Frank Bossel
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Why A Refinance Mortgage Rate Is EssentialBefore you refinance mortgage rate quotes are essential to get. A mortgage rate is the amount of interest charged to you for borrowing the money from the lender. The higher the interest rate is, the more you are paying to buy your home. To refinance, you will need to compare several company's rates and choose the one that is best suited to you financially. By doing this it will insure you get the most affordable loan available. When you take a look at just how important the mortgage interest rate is, there is no doubt you want to shop around.
How Important Are Interest Rates? Interest rates are very important. The difference in just a half percent of an interest rate percentage will make a substantial difference in the amount you pay for your home. For example, if you secure a home loan for $200,000 at an interest rate of 7 percent, for 30 years, your monthly payment is $1330. But, at the end of those 30 years, you will have paid $279,017.80 in interest alone on the home.
In contrast, if you have the same $200,000 home with a 30 year loan and this time pay just 6.5 percent interest, just .5 percent lower, you will have a monthly payment of $1264. You also will have paid $255,088.98 in interest, which is more than $20,000 worth of difference. As you can see, shopping around for the lowest rate does make a substantial difference both monthly and in the long term.
Should You Refinance? The question that is most often asked about refinancing is this one. Should you refinance? Refinancing a loan is the process of taking the current balance of your home and placing it into a new loan. The new loan will have a different interest rate and a different term. It also may or may not be owned by the same company. Refinancing is an opportunity for many people to save money both in the immediate term and in the long term. There are various reasons why you should be looking at interest rates for refinanced loans. |
