Nearly three in 10 mortgage borrowers either don’t know the rate they’re paying on their loan or decline to disclose it, according to a new survey by Bankrate.
Consumers who don’t keep track of their mortgage rate may be making an expensive mistake, financial experts caution.
“Most homeowners should know what their rate is,” says Martin Choy, operations manager at Westwood Mortgage in Seattle. “If they have an adjustable-rate mortgage, then they should contact their lender immediately and get their current rate.”
As mortgage rates inch higher, lenders are urging homeowners to check their rate and see if refinancing makes sense. As of July 11, the 30-year fixed-rate mortgage had increased to 4.7 percent from 4.13 percent a year ago, Bankrate reports.
An interest-rate increase can have a big impact on monthly mortgage payments. A $200,000 mortgage with a 4.7 percent interest rate can cost $119 more per month than the same mortgage with a 4.13 percent rate, for example.
Homeowners with adjustable-rate mortgages or fixed-rate mortgages may be able to lock in a lower rate if they’ve held the loan for a long time, financial experts say.
“There are many variables in determining whether refinancing is a good option,” Choy says. “How much do you owe? How much is your house appraised for? Is your credit score good? If you’re in better financial shape now – both with your monthly debt ratio and credit score – than when you got your mortgage, then you could qualify for better rates.”
The cost to refinance can vary, but, on average, borrowers can expect to pay between 3 and 6 percent of their balance in refinancing fees, according to Bankrate.
Source: “Don’t Know Your Mortgage Rate? You Could Be Costing Yourself Thousands,” Bankrate.com (July 18, 2018)
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