If you’re like most people, your mortgage is your largest monthly expense. But, how do you know if you’re paying too much for your mortgage? With interest rates at near-record lows, many homeowners could be saving hundreds of dollars a month by reducing their interest rate through a mortgage refinance.
Below is SuperMoney’s list of the best mortgage refinancing offers out right now. The widget is updated regularly and ranked by folks who have already gone through the refinancing process –consumers just like you who were looking to save money.
Or, scroll below to see if you’re paying too much for your mortgage.
Signs You’re Paying Too Much on Your Mortgage
Here are five signs you’re paying too much for your mortgage and some tips for fixing your situation:
1. Your interest rate is above 4%.
Mortgage rates were just lowered once again, so homeowners who have rates above 4 percent may be able to save more than $200 dollars per month by refinancing their mortgage. If you have a mortgage above 4%, you may want to see if you could be saving money.
2. Your ARM has just adjusted or is about to adjust.
If you have an adjustable-rate mortgage (ARM) and it has just reset to a higher rate, you may be feeling squeezed by your new monthly payments. If your new interest rate and monthly payment have risen, it’s worthwhile to determine if refinancing to a new 30-year fixed mortgage could save you money.
3. Your credit has improved since you got your loan.
If your credit was fair or poor when you first took out your loan, you may have had to pay a premium on your interest rate. Lenders reserve the lowest rates for borrowers with good to excellent credit. So if your credit has improved since you got your mortgage, you now may be paying too high of an interest rate.
4. Your income has increased.
Mortgage costs aren’t just about the monthly payment. The total cost of your loan is also determined by what’s called the “term”–the amount of time you have to pay off the loan. If your income has recently increased, or you’ve paid off other expenses and now have extra room in your budget, you may want to consider refinancing to a shorter term.
By refinancing from a 30-year fixed-rate mortgage to a 15-year mortgage, you may be able to lower your interest rate and significantly lower the total interest you’ll pay over the life of the loan. This can add up to thousands of dollars in savings. SuperMoney’s list can help you determine if it makes sense to refinance from a 30-year to a 15-year mortgage, based on current interest rates.
5. You have a jumbo loan.
Borrowers with jumbo loans (a loan that is larger than $417,000 in most parts of the country) generally pay higher interest rates than those for conforming loans (loans less than $417,000). Over the last several years, the spread between “jumbo” and “conforming” interest rates has been widening, meaning jumbo loans cost significantly more. Today, however, spreads are shrinking and borrowers with jumbo loans may be able to take advantage of lower jumbo mortgage rates.
Click here to check out how much lower your monthly payments could be.