Refinance Rates for Mortgages at their Prime

In Seattle, if you have a very high house payment, you might be interested in refinance mortgage rates.  If you financed your home at a time when the prime interest rate was 6.5% you could possibly save money on your monthly payment if you refinance when the prime interest rate is 4.25%.

If you can refinance your loan for at least two percent less than your original rate, there is a good chance that you will save money on not only monthly payments, but also the entire cost of your loan.  Additionally, you might even be able to shorten the term of your loan and have it paid off earlier if you save much more than two percent on your refinancing rate.

The prime interest rate is set by the Federal Reserve based on the well being of the nation's economy.  Banks and lenders borrow money from the Federal Reserve at the prime interest rate and then they lend that money at any interest rate that they choose.  

To remain competitive, most lenders charge about a percent higher than the prime rate for mortgages.  If you have had credit problems or if you have been self employed for less than five years, a lender might charge you a higher rate than normal.  Refinance mortgage rates then depend on not only the prime interest rate, but also on your personal credit history.

If you have had financial troubles because your cost of living in Seattle is so high, it is possible that you have experienced credit trouble as well.  If this is the case, your refinance mortgage rates might not be good enough to justify taking out a refinance loan.  

One thing you can do to lower your refinance rates and make the refinancing loan a financially sound decision would be to pay one or two extra points to the lender at closing.  While this costs you more up-front, it can lower your interest rate and in turn the final cost of your home.  You need to be careful, however, that the points that you pay do not end up making your home cost more in the long run without lowering your monthly payment significantly.

While it might seem worthwhile to save ten or twenty dollars per month because you live in Seattle where every dollar counts, financially, gaining so little in monthly savings is too costly to make the refinancing a good idea.  Instead, you should hold out for an interest rate that will save you at least $100 per month and does not increase the length of time that you will pay your mortgage.

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