Many homeowners with Bank of America have looked into refinancing their home in order to save money on their monthly mortgage payment. Homeowners have had financial troubles over the past months due to the economic slump, so many have refinanced their home loan for lower interest rate in order to get a lower mortgage payment as well.
Mortgage rates are currently around 5% and for many homeowners, this is a much lower rate than what they currently have. Some homeowners are able to refinance, locking this lower rate, and get a lower mortgage payment as a result. Obviously, a lower mortgage rate each month is easier to handle and this refinancing option is usually only beneficial on a 30 year fixed-rate mortgage.
Homeowners that can afford to refinance need to understand that even if they get a lower mortgage payment a 30 year fixed-rate mortgage may cost more over the long run. Due to the extended payment period, homeowners may end up paying more than they would with other mortgage options.
However, a homeowner that is simply looking at making their home more affordable may benefit from refinancing. Yet, homeowners need to look at their financial situation and make sure they can afford the costs that come with refinancing.