Mortgage Rates Mixed for Week of May 24

Low mortgage rates continue to provide financial opportunity and flexibility for buyers and homeowner seeking refinance mortgages.

Last week's mortgage rates were mixed, with rates for fixed-rate mortgage loans (FRMs) moving down and rates for a 5/1 adjustable-rate mortgage (ARM) moving up slightly. HSH Associates reported that combined average rates for a 30-year FRM moved down by 3 basis points from 5.21% to 5.18%. Average rates for a 15-year FRM offered borrowers a great deal as they moved from 4.62% to 4.60%, and rates for 5/1 hybrid ARM loans ticked upward from last week's 4.24% to 4.26%.

Refinancing to Shorter Mortgage Term: Low Mortgage Rates Provide Extra Savings

Refinancing from a 30-year mortgage to a 15-year mortgage saves significant mortgage interest over the life of the home loan, while lower average mortgage rates make monthly payments associated with shorter-term mortgages affordable.

Saving on Mortgage Interest: Using Mortgage Calculators

Using online mortgage calculators can assist with estimating potential savings. Here's an example:

You've been paying on your 30-year mortgage loan for 10 years and now owe $250,000. Your existing mortgage rate is 5.375%. Your remaining repayment term is 20 years. If you refinanced to a 15-year mortgage at 4.50%, you could save approximately $64,261.00 in total interest payments.

There are a few things to consider before refinancing to a shorter mortgage loan term:

• Higher monthly principal and interest (P&I) payments: A shorter loan repayment term increases your monthly payments. (In the 15-year mortgage refinance example above, you would save thousands in interest, but your monthly payment would increase from about $1,700 to $1,912.) Make sure you have plenty of flexibility for making higher mortgage payments; not having sufficient savings for meeting higher mortgage payments can prevent problems if your income changes.
• Making a financial plan: Financial planning for managing current finances and planning for retirement is a consideration when refinancing to a shorter loan term. Consulting with a professional financial advisor can help with determining how or if refinancing to a 15-year mortgage can benefit your financial situation.
• Refinancing costs: The costs of refinancing home loans offset potential savings. When considering refinancing, it's important to consider whether you'll have the mortgage long enough to break even on refinancing costs.

Paying off your mortgage faster can enhance your finances and lifestyle--with proper planning. Our live database of current mortgage rates can help you find the best mortgage rates in your area.