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How You Can Save By Refinancing Now

NEW YORK ( TheStreet) -- You will probably never see such a golden opportunity to refinance your mortgage loan in your lifetime.

With mortgage loan rates at such a low point, refinancing now can save you hundreds of thousands of dollars in interest. And by refinancing for a shorter term, you might be able to become debt-free at a younger age than you previously expected, thus setting yourself up for a more secure retirement.

Of course, as you face the daily onslaught of sales pitches, media reports and financial advice, you're unlikely to hear too many voices pointing the way to escaping the debt trap completely, but the numbers speak for themselves.

Mortgage rates change daily, and everybody's financial picture is different. But chances are if you're at mid-career and own a home, you have a mortgage loan. There's also a good chance that your loan has a 30-year fixed-rate, because when you bought your home, your greatest concern was monthly cash flow.

And with home values in many areas declining so much over the past several years, you haven't considered refinancing.

Right now, the mortgage rates are so low that you might be able to refinance with a 15-year fixed-rate loan, thus escaping the debt trap faster than you might have originally planned, while also cutting your monthly loan payment. The icing on the cake is the outrageous amount of interest you will avoid paying.

This discussion does not cover "cash-out refinancing," which increases your debt and, as we have seen in this real estate crisis, could lead to disaster.

The radical notion presented here is to clean up your personal balance sheet while taking advantage of historically low rates.

Checking available rates on Tuesday, Bank of America (BAC - Get Report) was offering a "conventional" 15-year mortgage refinancing for $200,000 at a rate of 3.625%. Of course, this rate doesn't factor in any concerns the bank may have if you have had recent credit problems, and the bank charges 1.125 "points" at closing, or a fee of $2,250 to lock in that rate on a $200,000 refinancing. Factoring-in the points and loan amortization, the Annual Percentage Rate, or APR, is 3.936%.

The APR is very useful if you are comparing competing offers, based only on the rate and the points.

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