4.25% 30 Year Fixed Rate
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Program Rate APR
30-Yr fixed 4.750 % 0.7 to 1
15-Yr fixed 3.750 % 0.7 to 1
5/1 ARM 3.125 % 0.7 to 1
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Making the Most of Your Equity

Financial markets and personal financial status are, for many people, constantly changing. In light of these fluctuations, the first impulse of most people, myself included, is to look at refinancing mortgage rates. It appears, at least on the surface, to be an easy decision; why would you not want to save money through a mortgage with a lower interest rate? However, I like to look at several factors before jumping into this particular decision.

First of all, before making this decision myself, or advising friends or colleagues to pursue refinancing, I ask myself if this is it, or will mortgage rates go down even more in the future? No one can predict where markets or going to go in the long-term, or how governing bodies are going to react to constantly shifting global economic climates. In some ways, it becomes a game of chicken; do I lock in this rate now, or do I gamble that rates will go down even more and risk a potential increase?

Once the fundamental question of will mortgage rates go down has been answered I also advise people consider the alternate costs associated with refinancing mortgage rates. Lending institutions are not charitable organizations. They are primarily concerned with extracting as much money as they legally and ethically can from potential clients. Knowledge is the only way that I know to protect myself from being taken advantage of. However, the benefits of refinancing a mortgage at a lower rate will almost always outweigh the costs accrued through the process, at least in the long-term.

First, most borrowers will experience an immediate decrease in their monthly payment. The time value of money being what it is, this immediate increase in short-term liquidity is often enough in and of itself to outweigh any fees or costs that are rolled into the principal.

Additionally, I have found it extremely beneficial to liquefy home equity through a refinance in order to pursue a business opportunity I otherwise would not have had the capital to take advantage of. This is an extremely risky move though, and should only be done in the case of the savviest of investors, as removing home equity can be a potentially costly endeavor if things do not pan out.