WHAS11 coverage

Related Content:

Watch Get Out of Debt - Part 1

Video Extras:

Extended Interview with Dave Ramsey

Reporter Debrief: Melissa Swan on “Get Out of Debt”

Printable Budgets and Tips:

FAQ’s for getting out of debt

Fair Debt Collection Practices Act, provided by the FTC

(WHAS11) - Right now, mortgage rates are at a 37 year low and homeowners are rushing to refinance.

The 30 year fixed rate continues to fall and it’s anyone’s guess what could happen in 2009.

It may be one of your new year’s resolutions; tighten the reins on that household budget and start saving some money.

With interest rates at their lowest in 37 years, you may be thinking about refinancing your mortgage to try to save some cash.

But you may want to be careful before you jump in to that new rate. How low will they go? 

Mortgage interest rates have continuously dropped for the last nine weeks and now the average sits at just over 5% for a 30-year-fixed rate mortgage.  That’s the lowest in 37-years.

Nick Ellis says his office is getting 300% more calls this year than last.  But he says, not everyone who calls will benefit from refinancing.

“For your particular needs, how long is it going to take you to recoup the expense?  That’s what it really boils down to,” says Ellis.

You may want to think about refinancing if:

1.   You have good credit.  It no longer has to be flawless, but still has to be good.

2.   If you have equity in your home. You don’t owe more than it’s currently worth.

3.   The new rate is at least 1-2 percentage points lower than your current rate.

4.   You’re not moving soon because it still costs to refinance; about $2,000 to $5,000 on average. 

You want to make sure you stay long enough to recoup that money, which usually takes at least 4-5 years.

“We advocate people shortening the number of years left on their mortgage, getting the lower rate, cheaper rate. 

Shortening the number of years they have to pay on their mortgage,” says Ellis.

And most homeowners in Louisville are still seeing a steady 4% to 7% return appreciation, unlike many other areas of the country. 

That means now may be the time to grab those lower rates because it could save you thousands of dollars a year.

Many mortgage brokers are hiring extra help just to process the additional applications coming in. 

But there is a down-side.  With those lower interest rates, many folks decide they can afford a larger house and so begins the cycle again. 

But its something most experts say will likely not happen again, thanks to more regulation.

More Resources to help you Get Out of Debt:

Louisville Asset Building Coalition

Dave Ramsey's website

Consumer Credit Counseling

Money Management International

A+ Credit

Louisville Legal Aid Society

Better Business Bureau

Debtors Anonymous