With interest rates at the lowest levels since October 2016, many people are considering re-financing their existing loans. Homeowners have the potential to save hundreds of dollars per month and thousands over the life of their loans by refinancing. But even with historic low rates,is refinancing right for everyone?
Here are some facts to consider.Consider the rate. Traditionally mortgage professionals recommended refinancing if the borrower could save at least 2% on the rate, however these days, professionals suggest a savings of as little as 1% can be a benefit. Consider the cost. Refinancing is a similar process to taking out the initial loan. The costs to consider are application fee, origination fee, appraisal and others. But in most cases, a refinance can cost as little as $2500. Calculate your monthly savings at the lower rate to determine how many months the closing cost will take to re-coup in savings (your break-even point). Remember, it’s important to shop around for the best rate and lowest costs. Don’t be afraid to negotiate. A homeowner can benefit most from refinancing when the rate drops, when they are closer to the beginning of their loan term rather than the end, when switching from a 30 year to a 15 year, when their credit score has improved from first taking out their current loan and when their home has increased in value. So if any of these conditions apply, it may worth considering refinancing. Need help finding a trusted mortgage professional? Contact me for recommendations.
