By John Wasik
(Reuters) – I got a letter from my bank the other day offering a streamlined refinancing deal for my current home mortgage. It was one of those “quickie” offers tailor-made for my loan situation and designed to net swift business for the bank.
What was advertised in the letter seemed like a decent deal — a 30-year, fixed-rate loan at a 4.16-percent annual percentage rate — so I called the bank for more details.
As it turns out, there was a lot of fine print that made it seem less decent, but I had to ask a lot of questions to find that out. While mortgage rates are still at generational lows, making it tempting to refinance, you have to scrutinize any deal that is offered. You may not even qualify for the appealing rates that get dangled in front of you.
Banks like to send out these offers to preferred customers, appealing to whatever loyalty they may have toward their institution. Mortgage offers are often hard to compare once you factor in all the expenses, and banks tend to expect indolence and inertia on the part of their customers.
My current mortgage rate is 4.95 percent; so based on my loan balance, I could save about $55 a month or $660 yearly over my present payment on a 30-year loan. Since I usually aim for savings of at least $100 a month in a refinancing, the appeal of the offer was modest. On the rate alone, I could probably do better since the average 30-year rate nationally was 3.88 percent at the time I received the offer, according to Freddie Mac’s primary mortgage market survey (at freddiemac.com).