Is It Time to Refinance?

Recent action by the Fed has interest rates on 30 year fixed rate mortgages being right around 5% and in some cases (depending on your credit score) even lower.

These are the lowest rates we’ve seen in over 35 years.  With that being said, I believe everyone should consider refinancing their homes.


You could save money if you refinance your home loan.

I purchased my house about a year and a half ago at 6% and recently locked in at 4.85%…it will take me about two years to recoup the closing costs associated with the refi, but I will immediately be saving a little over $100 per month on my mortgage.  Note, my loan amount is just under $200K, the higher the loan amount, the more money you save.

There are a couple of ways to benefit:

  1. First, know both your current mortgage rate and current refinancing rates (and associated costs like closing attorney fees, appraisal fees, etc.). Generally, if the current rates are at least 1% lower than your current interest rate on your mortgage.
  2. If you have an adjustable rate mortgage think about locking it in for a longer term at today’s low rates, among the lowest in the last 25 years. Or if you know you will be moving in the next few years, think about locking in a lower rate 5 year adjustable mortgage.
  3. If you have lots of expensive credit card debt or second and third mortgage debt, consider paying it off with a new first mortgage that puts all your debt in one low-rate long-term obligation.

To get these advantages, you’ll generally have to have good credit, be current on payments,  and the value of your house must be above the amount of the mortgage.

To determine if refinancing is right for you, ask yourself these two questions:

  • How long do you plan to stay in the house or how long do you plan to own the house?
  • What are the costs associated with the refinance and how many months of money saved from refinancing will it take to cover these costs?

These questions will help determine the length of time it will take to actually realize the savings.  Generally speaking though, the immediate savings is worth it even if it takes 1-3 years to “break even” because houses tend to appreciate.

Send your friends a link to this article, they’ll be glad you did because everyone could use some more money in their pocket which will help our economy and then we all benefit!

Possibly Related Posts:

Both comments and pings are currently closed.

Comments are closed.