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 How to compare mortgage refinance rates from lenders
  More reasons than rates to do a mortgage refinance
By the EchoBay Loans Expert
 How to compare mortgage refinance rates from lenders
Dear EchoBay Expert: When trying to compare all the quotes I've received from lenders to refinance my home loan, I keep getting confused since one lender may have a lower interest rate but higher closing costs, another low closing costs but higher rates. How do I figure out who has the best mortgage refinance rates?! Thanks for the help.

Dear Loyal Reader: Before you compare anything, you'll want to make sure you're comparing similar loans. Comparing the costs of mortgage refinance rates on a 15-year arm to the costs of a 30-year fixed-rate mortgage isn't going to help you figure out which lender is giving you the best deal.

The best way to compare one lender to another is to compare the total APR instead of just looking at interest rates or closing costs individually. The Truth in Lending Act requires lenders to provide you with an APR, which is the cost of the loan including interest, lender points and closing fees.

By reviewing the APR, you'll get to see the bigger picture rather than just one small part of it. You'll also want to consider how long you're keeping the loan. If you plan on moving within the next year or so, you're not going to want to go with a loan that has high points and a low interest rate because you're not going to be there long enough to recoup the costs you paid at closing.

In this scenario, a higher interest rate would make more sense than paying a large amount of upfront fees. On the other hand, if you plan on staying in your home throughout the term of the loan, the lower-interest option will be your best bet.

 More reasons than rates to do a mortgage refinance
Dear EchoBay Expert: Interest rates just don't seem low enough to motivate me to refinance my home loan, but it seems all my neighbors have done it recently. Am I just being lazy or are there any other reasons why I should get fired up to do a mortgage refinance now?

Dear Loyal Reader: There are several other reasons to seek out a mortgage refinance loan other than just rates.

First, when rates drop, you can often refinance for a shorter term while keeping your payments the same. This will enable you to pay off your home sooner and save thousands in interest.

Second, if you have a jumbo mortgage, it is always a good idea to refinance when your loan amount qualifies you for a conventional mortgage. Conventional mortgages have lower rates than jumbo mortgages since they are smaller in size and less of a risk to lenders.

Third, if you have a variable interest rate, it may be wise to refinance for a fixed rate when rates drop. Over a thirty-year term, rates can fluctuate dramatically causing dramatic swings in your payments as well. By refinancing to a fixed rate, you can eliminate the uncertainty that is associated with a variable interest rate.

Do be sure to calculate the breakeven point if you decide to take out a mortgage refinance loan. You can do this by looking at your potential savings compared to the closing costs to see how long you would have to stay in the house to truly begin reaping the rewards from a refinance.

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Avg. National Rates
30 Yr Fixed 5.78%
15 Yr Fixed 5.39%
1 Yr ARM 4.80%
WSJ Prime 6.50%
Fed Funds 3.50%


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