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Steady Decline in Mortgage Rates- Pay MORE principle Every Month

Mortgage rates are on a steady decline.

According to Freddie Mac's weekly mortgage rate survey of more than one hundred banks nationwide, the average conforming 30-year fixed rate mortgage rate fell to 4.23% this week, the fifth straight week through which rates fell.

FHA mortgage rates, VA mortgage rates and jumbo mortgage rates are down, too. Each has moved to a multi-month low.

Because of today's lower mortgage rates, homeowners pay less interest to pay down their loans. Interest costs are down 8% since January 1. There are opportunities for buyers and refinancing homeowners to save good money.

Homeowners Paying More Principal With Each Payment

Mortgage payments are comprised of two parts -- principal, and interest. Principal is a repayment to the bank of the original amount borrowed; interest is the fee paid to borrow the money at all.

The principal-to-interest ratio of a mortgage payment changes monthly, with the principal portion increasing monthly, and the interest portion decreasing monthly. The schedule of payment is known as amortization (ah-mor-tih-ZHAY-shun).

Amortization is the reason why payments in the early years of a loan are big on interest and light on principal. It's a model which favors the banks. That is, until mortgage rates get low.

With current 30-year fixed rate mortgage rates at 4.23 percent, amortization schedules aren't so bad. The first payment of a new 30-year fixed rate mortgage is 28 percent principal.

Compare this percentage to just two years ago :

February 2011 : First payment breakdown of 22% principal, 78% interest
February 2014 : First payment breakdown of 28% principal, 72% interest
Even as compared to rates from the start of the year, amortization schedules are more friendly.

A mortgage at January's rates needs fifteen months of paydown before the monthly principal ratio reaches 28% percent. A mortgage from February starts at 28%.

Today's mortgage applicants save more money.

Falling mortgage rates have a cumulative effect on household savings. Because mortgage payment remains fixed for 30 years, the money you save on low rates is multiplied by the number of months in your loan.

The effects can be huge.

Assuming two $300,000 mortgages -- one started this year and one started in 2011 -- the difference in mortgage interest paid over 30 years is $55,000. That's more than one-sixth of the original amount borrowed.

Today's homeowners will pay 19% less mortgage interest over the life of a 30-year loan.

Whether you you're borrowing at the $417,000 conforming loan limit of Lower Merion, Pennsylvania; or Miami, Florida, for example; or, at the $625,500 jumbo loan limit of Bethesda, Maryland; or San Jose, California, you'll save the same nineteen percent.

Refinancing In 2014 : No Home Equity Required

Million of U.S. homeowners remain eligible to refinance into today's ultra-low rates.

With just modest credit scores and a verifiable income, homeowners can be mortgage-eligible via any one of five government agencies -- Fannie Mae, Freddie Mac, the FHA, the VA and the USDA. Each has a refinance program for homeowners with, or without, home equity.

For homeowners whose homes have lost value since purchase, there are options :

Fannie Mae / Freddie Mac : The HARP Refinance Program
FHA : The FHA Streamline Refinance Program
VA : The VA IRRRL / Streamline Refinance Program
USDA : The USDA Streamline Refinance Pilot Program
For everyone else, "standard" refinance programs give access to great, low rates, too. The key is to avoid refinance high closing costs. Paying too much to refinance can reduce the benefits of refinancing at all.

When you get a rate quote, ask the lender about its low- and no-closing cost mortgage options. Rates will be marginally higher than this week's published Freddie Mac rate, but the money saved may be worth it.