How low will Mortgage rates drop

Home loan rates are at historic lows and word on the finance street is expect lower in the next 6 months. November 3rd the feds proclaimed to buy 600million in treasury bonds. With another fed backed stimulus the reaction in the market can cause rates to dip under 4% for a 30yr fixed note, a historic low! A general rule of thumb is if you can lower your rate by 1.5 basis points and recover the cost of refinancing in 30 months you should refinance. If you have a mortgage with TD Bank and signed during the Mortgage Rate Security offer (still current) than you are in better luck. The cost of this refinance will only be .05% of your current loan balance. If you had purchased your house over 2 years ago than the 1.5 basis point drop should be in effect anytime now. Personally, I'm waiting for 4%. Bankrate.com shows an average of  4.250% now. 

let's go over an example.

Loan price: 200k
Financed: 30 years fixed
Rate: 5.5%

Payment = $1,135.58

Now let's refinance to 4% and for easy math keep the rest of the loan the same.

New Payment = $954.83 which is a savings of $180.75 each month!

Now a savings is a savings but how you apply your savings is another choice you have. If the monthly savings was not needed to survive or change your life style than apply the savings back into your mortgage. Paying an additional $180 a month to your loan able will lower your loan term by 8 years and save thousands of dollars in interest.

Go pull your loan documents and see if refinancing is right for you! 

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