After years of rock-bottom interest rates rates, borrowing costs are expected to move higher. The MBA expects a half percentage-point increase in the 30-year fixed rate, mirroring an identical gain in the benchmark 10-year Treasury note, whose yield has moved up sharply in recent days to 2.3 percent.
The benefits of refinancing, which may finally be available to millions, have long been irrefutable.
If you took your 6.4 percent, 30-year, fixed-rate mortgage for $300,000 of March 2006 and converted into a 4 percent, 20-year loan, you could pay off the note four years earlier, cut your monthly payment by $205 and save more than $135,000 in interest payments over the life of the loan.
“Any borrower who has an interest rate of 5 percent or more should be running the numbers,” says hsh.com's Gumbinger. “It’s not going to get any better than this.”
On the other hand, say experts, if you have 10 years or less on your loans or owe $50,000 or less, you’d probably do best to resist temptation and stick with what you have — despite those friendly offers in the mail.