Mortgage rates are low, but not everyone should jump

(Salt Lake Tribune) Mortgage rates are once again below 5 percent. Should you refinance?

Nationally, the average rate for 30-year fixed-rate home loans fell to 4.97 percent in the week that ended Oct. 30, down from 5.04 percent a week earlier, the Mortgage Bankers Association said. The average rate for 15-year loans fell to 4.33 percent from 4.53 percent.

There's a basic rule in the mortgage industry that says if you can lower your rate by at least 1 percent, you should consider refinancing. Rates have fallen so much in the past several months that many people who purchased homes in recent years, or even this year, have loans that fall into that category.

Many Utahns, such as Dan Smith of West Jordan, are trading in rates in the 5 percent range for lower rates. He swapped a 25-year loan at 5.85 percent for a 15-year loan at 4.25 percent.

Although the 1 percent rule is a good start, it's not an absolute. "If you have a loan balance of $400,000 or more, refinancing at even a half of a percentage point less may make sense," said Julia Borst of Metropoint Mortgage in Draper, president-elect of the Utah Mortgage Lenders Association in Salt Lake City.

For example, the payment on a $500,000 mortgage at 6 percent -- not counting homeowner's insurance -- is $2,997. At 5.5 percent, that payment is $158 less, or $2,838.

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