Mortgage Mania

House home improvement money financing mortgage interest rates

Tracy Aller is living proof that everything Americans used to believe about mortgages just isn't true anymore.

Aller says she has refinanced her home "Three times in a five year period."

In the past, refinancing was something homeowners did maybe once in a lifetime. But over the last two years, perpetually plunging rates have turned many consumers, into "serial refinancers" -- always looking to borrow at rock bottom.

This week may be it -— with the average 30-year mortgage hitting 6 and 3/8%. The last time rates were that low was May of 1967 when the King of Rock and Roll cut his wedding cake at the Aladdin Hotel in Las Vegas.

The interest implosion has set off a feeding frenzy and mortgage brokers are scrambling to keep up with the calls coming in.

Last week was the busiest this year and 6 out of every 10 loans were refinances.

"We've seen volume double in the last couple of weeks and the next 45 to 60 days are gonna be jam packed," says Bob Moos of Pillar Financial.

And its no small wonder when you consider that if you financed $150,000 for 30 years at the 1999 rate of 8 percent, you'd be paying $1,100 a month. That same loan at today's rates would cost you $935 dollars, $165 dollars-a-month less.

But the big savings come if you can afford to convert that loan to a 15-year mortgage at 5 3/4 percent. You'd pay $1,245 a month, but save a staggering $171,000 dollars in interest over the life of the loan. All this good news comes from the carnage on Wall Street.

Investors concerned about the stock market are putting more money into bonds. That in turn has driven down the cost of borrowing.

Greg McBride of advises: "You need to take advantage now, because no one knows when rates will turn around -- only that they go up more quickly than they come down."