Now could be the perfect time to refinance your mortgage

By Lucy Cohen Blatter | January 14, 2015 - 2:59PM

It seems like we hear that mortgage rates are at "all-time lows" all the time. But now they may very well be. That's good news for anyone looking to buy an apartment in New York City, sure, but it might be particularly helpful for apartment owners (with mortgages in tow) who are looking to pay a little bit less per month.

Thanks to a "perfect storm" of low rates (3.75 percent for a 30-year fixed mortgage), rising apartment prices and a recent decision by the Federal Housing Administration to lower fees the agency charges to borrowers for mortgage insurance (more on that below), the Wall Street Journal reports that now could be an ideal time to refinance.

How it works: At the end of the month, the FHA will lower its annual premiums. Anyone making a down payment of less than 5 percent on a loan of $625,500 or under will pay 0.85 percent in fees, down from 1.35 percent, while loans with down payments of more than 5 percent will see a change to 0.8 percent from 1.3 percent. (Note: this only applies to mortgages with 15-year or longer terms.) In New York, this will probably be the biggest help to buyers of smallish condos (since co-ops would almost never let you put down less than 5 percent anyway).

Who should consider refinancing: Anyone who could see a break of at least one percentage point from their current rate. This is especially likely if you got an FHA-insured mortgage in mid to late 2013, when the average rate of a 30-year fixed mortgage spiked to 4.5 percent and the FHA rate was up to 1.35 percent, meaning you locked in arguably the highest rate of the past few years.

How to do it:

Use an online tool like Bankrate.com or HSH.com to compare rates.
See if your bank will offer you a deal on your rate or closing costs since you've already worked with them.
Ask your lender to calculate how long you'd have to keep your loan so that any potential savings offset the closing costs of refinancing

The three-percent-down mortgage you've never heard of that's available in NYC

5 ways to get a lower mortgage rate (sponsored)

3 reasons not to pay off your mortgage early

Cash poor but co-op rich? Consider a home-equity line of credit (sponsored)

Brick Underground articles occasionally include the expertise of, or information about, advertising partners when relevant to the story. We will never promote an advertiser's product without making the relationship clear to our readers.