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Q&A: Should we refinance our 30-year fixed-rate loan?

Loan, Mortgage Document, Application Form, lender, Finance, Applying,

Loan, Mortgage Document, Application Form, lender, Finance, Applying, Pen, borrower, borrow, borrowing -- for lsblog15 Photo Credit: iStock/

Q: My wife and I are pondering a refinance. Our current loan is a 30-year fixed-rate conventional mortgage at 5 percent. Our loan balance is about $150,000. The new loan we've been offered is a 15-year fixed-rate conventional loan with a 3.75 percent interest rate and zero points. Our closing costs for the loan will be $2,625 plus prepaid items such as escrow impound reserve setup fees. Our closing costs would be rolled into loan balance to limit our out-of-pocket expenses. We are shopping for better but were going to use this as an average loan option. Your thoughts?

A: It sounds like an excellent refinance offer. It's good that you are using that to shop around, shake the tree and see what else you can get. But if that's the best offer you get, take it, close as fast as you can and be happy. You're getting a very fair deal and an interest rate at 3.75 percent, the rate is so low that it's almost like borrowing money for free. Not quite free, but there were days when the mortgage rate was over 12 percent.

I just closed on a very similar 15-year loan and I'm thrilled.

Ilyce R. Glink's latest book is "Buy, Close, Move In!" Distributed by Tribune Media Services.

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