Refinance Your able to get a lower fixed-rate loan than the adjustable rate you're By Robin Korn, VP. Membership Banking, American Express (NAPSA)—According to the Department of Housing and now paying. Urban Development, a record number of Americans, more than 71 million, now own their own homes. And many of those Amerieans may be able to take advantage of the substantial savings of mortgage refinancing. With today’s mortgage interest rates relatively low in most U.S. markets, you way be able to lower your monthly mortgage payments by refinancing your mortgage. Refinancing at Internet Speed For a fast, easy way to determineif refinancing may be right for you, consider using an onlme mort- gage calculator like the one available at americanexpress.com/mort gages, where you can quickly com- pare mortgage casts and interest rates. Many reputable mortgage lenders also offer loan applications and approvals online. Loan decisions can often be made on the same day you apply. Here’s a closer look. Take Control of Your Finances Traditionally, according to the Mortgage Bankers Association of America (MBAA), lenders have recommended refinancing when the difference between your exist- ing mortgage rate and current interest rates is at least two per- cent. But, according to the MBAA, today’s low-cost and no-cast refinancing options mayallowfor significant monthly savings, even when the difference is as low as one-half percent. For example, if you have a $150,000 mortgage financed at 9 percent for 30 years, and refinance the full amount at 7.5 percent, your payments would drop from $1206.93 to $1048.82 per month. Over the life of your mort- gage, according to American " @ Express’ mortgage caleulator, you'd save more than $56,006, not including closing costs and other refinancing expenses. Refinancing in today’s market maay help you: Change your mortgage term. Refinancing may allow you to time your mortgage pay-off date te coincide with future events that ean affeet your finances, such as your retirement or the year your child will begin attending college. * Make Payments More Pre- dictable. Most homeowners have a mortgage that falls into one of two general categories: * a fixed-rate mortgage, which locks in a fixed interest rate for the entire term of the loan, usually at least 15 vears or, more commonly, 30 years. Fixed rate loans offer the stability of equal monthly payments and are often used byfirst-time buyers. * an adjustable-rate mort- gage (ARM), which starts out with an interest rate that is usually lower than a fixed-rate loan, but then adjusts up or down periodicalHly. The length of the loan varies from one year to 30 years. If you have an ARMand are currently facing imcreasing rates (or if you'djust like the certainty of a fixed-rate mortgage), refinanecing when fixed-rate mortgage interest rates are low may be a good idea. Depending on your particular situation, you may evenhe Calculate Your Costs To decide if refinancing your mortgage is a good idea for you, be sure to add up the total costs of refinancing. You'll want to include refinancing expenses such as closing costs and processing fees. Typically, you can expect to pay between 3 and 6 percent of your outstanding loan principal as closing costs, according to the MBAA. Determine how many months it will take to recoup your closing costs by dividing your refinancing costs by your potential monthly savings. If you plan to stay in your home longer than the time it takes to recoup costs, refinancing will likely save you money. Tips to Remember When going through the refinanciog process, be sure to alsa: * Know the tax consequences of refinancing. * Consider a trusted brand for your morigage. * Consider the total “price” of the mortgage. e Consider a second opinion. if you find that refinancing is saving you a significant amount each month, you may also want to consider consulting your financial advisor for tips on howto create a financial plan for your extra funds. An advisor can help you set up a plan that best fits your timeline, tolerance for risk and finan- cial goals. American Express can help you find a mortgage both on the Inter- net at americanexpress.com / mart &ages or over the phone at 1-800AXP-1016. American Express Financial Advisors Inc. Member NASD. American Express Company is separate from American Express Financial Advisers Inc. and is not a broker-dealer.
