Same Rate - Bigger Home

If you presently own a home, and plan to stay there, you may be able to benefit from lower rates by refinancing your existing home mortgage. For example, if you have an 11% mortgage, and refinance at 8%, you could save three percent, or about $218.00 per month on a $100,000 mortgage.

Costs involved in refinancing should be carefully considered before taking action. These costs include legal fees, possible discount points, loan initiation fees, and other �closing� costs related to a new loan. The benefit you receive from lower payments may or may not offset the added expense.

You may also benefit from lower interest rates by �buying up� to a larger home. If you currently have an 11% rate on a $90,000 mortgage, your payments are approximately $857 per month. You don�t want to raise your payments, but want a larger home. Because rates are lower now, you may be able to secure an 8% loan. To keep your payments at the $823 per month level for 30 years, you could borrow approximately $16,000 at 8%. As you can see, your borrowing power goes up, as interest rates go down. For the same $857 per month, you could own a larger home.

Although rates are likely to remain at present levels for the near future, don�t wait to long to begin the selling/buying process. Remember, you need to allow time to sell your existing house, close the sale, and buy your next home, all before interest rates go back up.