With mortgage rates at historic lows, I wanted to take advantage of the opportunity. Last year (2011), we refinanced the rental we purchased in 2007. They were able to roll the closing costs into the mortgage and still give us a reasonable rate. However, with our primary home, this wasn’t an option for us. We bought our home in 2009 with a 5/1 ARM at 4.125%.
I read an article on Yahoo recently which advertised a program through Valley National Bank for PA and NJ residents to refinance at a flat rate of $499. The current rate for a 15 year fixed mortgage was 3.5%. The real interest after the tax deduction for a family in our tax bracket is 2.5%. Although we save literally hundreds of thousands of dollars a year and could potentially pay our home in 3-5 years, it makes more sense to invest this money then pay for a debt at 2.5%.
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