To ensure that you get the best home refinancing rate on your new mortgage it is important that you shop around. Remember every financial institution is able to take advantage of the lowered rates as it is backed by a Federal cut, not an independent promotion. Although you should expect to pay anywhere from 2%-3% of the total loan value in closing fees, by doing your research you can cost your expenses.
For Example: Consider Janice, a first time condo shopper in the L.A. market. She bought her new home in August of 2008 and decided to take advantage of the low refinancing rates that were available. On the advice of her accountant she worked diligently to secure a loan where the fees would be repaid back by her savings in under two years.
Her quest first started at her local bank branch but quickly ended when they promised a low interest rate of 4.9%, but there were additional points (a point is equal to 1 % of the total mortgage value) that would have jacked up her total refinancing fees to an unacceptable rate. After searching the web and shopping around, she finally settled on using the resources courtesy of her managed portfolio. Not only were there no points required to lock in the 4.875% rate (mortgages for condos tend to be a bit higher than the going rate for free standing homes), but they cut many of her other closing costs as she had a substantial amount of money on deposit with them. Even if the bank or financial institution you normally do business with does not have an enticing offer, there are plenty of other refinancing options available for your loan.
With historic lows available for mortgages, consumers are flooding financial institutions with applications. In this new world of mortgage loans only the strong will survive and that means those with excellent credit, a minimum of 20% equity in their home, and very little (other) financial obligations can tap into rates that are falling between the 4.5%-4.75% range (for traditionally 30-year fixed rate mortgages).