Home refinancing tips while interest rates are low

RHINELANDER - With mortgage rates at low levels, homeowners looking to save money each month could consider refinancing.

Refinancing might seem like the thing do since interest rates are at a more affordable level.

But before people make the decision, experts say you need to do your own homework first.

People say we should learn from our mistakes. In the past five years, one subject area many failed in is mortgages or refinancing their mortgage

"People maybe borrowed more than they should have on that house, two, three, four years ago," Lisa Spencer, Rhinelander's CoVantage Credit Union Branch Manager, says. "Now they're trying to do something to try and alleviate some payment problems they might have to reduce a payment."

Spencer says she's had quite a few inquiries about refinancing. But she says people need to come prepared.

"What's been pretty disheartening for people is they maybe borrowed X amount of dollars for their home, now when they're trying to refinance to try and find some payment relief, they've found their home value has actually dropped."

Sinking home values is a common theme in many areas. Eric Kane is the loan supervisor at Ripco Credit Union in Rhinelander. He agrees that home values have dropped and people can try to find theirs out on their own.

"Take a look at the tax bill," Kane says. "See what your tax bill says the house is worth and compare that to the balance of your mortgage. A rule of thumb is the best rates are out there for people who owe no more than 80 percent of what they're home is worth."

Kane says all situations are different and people need to ask questions and make sure to read all the paperwork.

"One is the rate you're looking at a 30-year fixed rate, is it an ARM [Adjustable Rate Mortgage]? For example there are lenders out there that will offer you a wonderful rate that's frozen for two years or one year and then the rate flies on you."

And with it goes any savings from the first few years. Kane says you must also consider how long you plan to stay.

"If you're going to stay in that home for five years, ten years�half of one percent, fifty basis points, is more than enough. But if you're not able to look past five years, it better be a lot of savings."

And Kane says people should be smart about big financial decisions and work with someone they can trust.

"Be aware of what the product is, recognize that the rates you hear about are for specific homes and specific criteria and you might not qualify for those." 
Story By: Matt Doyle