Home mortgage rates are still at record lows this year, according to Freddie Mac or the Federal Home Loan Mortgage Corporation. For a 30-year mortgage this year, the rate is 4.5% which is down from last year’s 5.2%. This year’s rate is even lower from that of two years ago, which was at 6.5%. What these all mean is that home refinance rates are at an all time low too, this year. If you’re thinking of refinancing your home mortgage, there’s no better time than now and take advantage of this year’s rates, but only if you have the right reason why you want to refinance your mortgage.One of the reasons, and the usual reason, why homeowners refinance their home mortgage is to take advantage of the low rates. You can lower your monthly amortization with a lower interest rate, of course. You can save up to $7,560 over ten years if you reduce your interest rate from 6% to 5.5% of a $200,000 30-year fixed rate loan. You can also change from an adjustable-rate mortgage to a fixed rate if you think the home refinance rates will rise in the future. Conversely, you can change from a fixed rate to an adjustable-mortgage rate if you think the rates will continue to decrease.The other reasons why some homeowner resort to home refinancing, aside from the low home refinance rates, was to adjust the length of the mortgage. You can either shorten or lengthen the term of your mortgage. If you want to finish paying your mortgage faster, or to build your home equity faster, you may want to shorten the length of your mortgage. Shorter term refinancing usually have lower rates also, so although you will have a higher monthly payment because of the shorter term, in the long run, you will save money because you’re paying less rate.If you have been paying your home mortgage for a long time now, it may not be a good idea to refinance your mortgage even though there is a much lower home refinance rates. This is because the longer you’re paying your mortgage, your payments are going towards paying the principal loan. If you resort to refinancing, you will restart the process again and you’ll be again paying for the interests. There are some mortgage loans that will charge you a large fee if you pay your loan early, known as pre-payment penalty. It may also cover refinancing, so it is best to ask your lender first.Aside from the pre-payment penalty, you should also remember the whenever you refinance, you will be paying fees that can add up to thousands of dollars. You may have to pay refinancing fees that totals up to 3% to 6% of your outstanding principal. Refinancing fees differ from States to States and lenders also have their own fees that differ from that of other lenders. Even if the home refinance rates are low and you’re tempted to refinance your home mortgage, it is best to consider these costs and compare it with the amount of money you will be able to save.
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