With mortgage rates at an all-time low, now may be a great time for a mortgage refinance. By refinancing your home, you might find a better interest rate or get out of an upwardly adjustable rate loan. And mortgage rates may stay low, because the Federal government wants to keep money flowing to try to stimulate the economy.  How long is, of course, not guaranteed.

What exactly is a mortgage refinance?

A refinance occurs when a lender pays off your current mortgage and issues you a new mortgage with new terms. The duration, type of loan and interest rate may be different from your previous mortgage. People commonly refinance to:

• Secure a lower interest rate. If interest rates are lower than when you received your current mortgage, you could reduce your monthly payments and the total amount of interest that you pay over the life of the loan by refinancing at a lower rate.

• Convert from one type of mortgage to another. If your current mortgage is no longer the right fit, refinancing can help you obtain a different loan type. For example, if you currently have an adjustable-rate mortgage and seek the security of a set interest rate and stable monthly payment, you could change to a fixed-rate mortgage.

• Build equity faster. If your financial situation has improved since you bought your home, you may want to secure a mortgage with a shorter term.

• Avoid foreclosure. If you are current on your mortgage payments but unable to refinance because you have little or no equity in the home, you may be able to refinance to a lower or more stable rate through a Home Affordable Refinance Program.

What are today’s rates?

You can view Bank of Little Rock Mortgage’s rate chart daily to see current interest rates for home loans. Your mortgage rate can be affected by a number of factors, including your credit score, loan-to-value ratio, your down payment and the loan program you choose.

You can also subscribe for free to our Monday Mortgage Memo, which is a weekly email we will send out to you with a list of the current mortgage rates and a few links to our other offers and news articles on the mortgage finance business. 

Should I refinance?

Only if you have enough equity in your house. Over the first year of the refinance loan life (at current rates), the median borrower will save about $2,900 in interest payments on a $200,000 loan (Freddie Mac, 2012). The right time to refinance is determined by the amount of time you plan to stay in your home. Because refinancing your current loan will cost you in both closing costs and resetting interest payments, make sure you plan to remain in your home long enough to make the interest rate savings worth these new costs*. You can talk with our mortgage professionals to learn more and weigh all the issues to see if now is the right time to refinance.

If I do decide to refinance, what closing costs should I expect?

Closing costs, as a rule, will average somewhere between $2,000 and $2,500. If you have not been in your house long enough to recoup closing costs, one option is a “no closing cost loan.” Rather than paying the closing costs up front, a borrower can refinance at a slightly higher rate, which might only cost an extra $20 or $30 a month.

Reach out to your lender to discuss refinancing options that fit your budget and goals. To get a sense of how much it may cost to refinance your mortgage, check out our refinance calculator. Bank of Little Rock Mortgage offers a “No Cost Refinance”.  Under this program, Bank of Little Rock Mortgage will pay your closing costs for you, not roll them into the loan.