There was a useful article that came out in the AP this week on some details of refinancing into a lower mortgage rate. Here are a few excerpts:
Q: So, can I get a mortgage with a 4.78 percent rate?
A: Not necessarily. There are several reasons that borrowers may not get the low rates they expect.
First, consumers must realize that Freddie Mac reports average rates, which should not be thought of as a standard, industrywide number.
Second, a rate can change several times during the day due to fluctuations in the market — it could be 5.5 percent in the morning and increase to 5.75 percent in the afternoon.
Loan rates also vary by type. For instance, Freddie Mac’s survey showed Thursday that the average rate on a 15-year fixed-rate mortgage was 4.48 percent this week, lower than the 30-year fixed mortgage. And the size of the loan can affect the interest rate — “jumbo loans,” ones taken out for expensive homes, are becoming harder to get and carry higher rates than loans for $729,000 or less, for example.
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Q: What if I manage to snare a mortgage rate in the 4.78 percent range — are there other costs to worry about?
A: There most certainly are.
One aspect of mortgages that can confuse borrowers is points, or fees. Points vary by lender: Some are paid at the time of application, others at closing. Higher fees mean more cost to the consumer, and could outweigh the benefit of a relatively low interest rate.
Some fees, like title insurance, are negotiable, so don’t be shy about trying to get them reduced.