I am asked this question daily by my existing clients, and prospective clients – it is important to explore whether it does, or does not make sense to refinance your current mortgage.
Mortgage rates are still near historic lows – this means you may be a good candidate to refinance your current mortgage.
If you answer yes to any of items listed below then it may be a good time to explore refinancing.
- Your current interest is higher than the market rate.
- You have an adjustable rate mortgage.
- You have high interest revolving or installment debt that can be consolidated into a lower monthly payment.
- You are paying mortgage insurance in an FHA loan and you believe you have enough equity to eliminate it.
- You are interested in reducing the term of your mortgage to pay off your home faster.
- You are interested in taking cash / equity out of your home that will produce a higher rate of return than the offered mortgage interest rate.
Refinancing is not for everyone – if you answer yes to any of the items listed below, now may not be a good time to refinance your mortgage.
- You will be selling your home in the near future. Refinancing has closing costs, the breakeven point is usually 24-36 months (at times it can be longer), and if you are thinking about selling your home before this time - refinancing may not be the best option for you.
- Consider the benefit compared to the cost of refinancing. The benefit has to outweigh the cost, if it does not- refinancing may not be the best option for you.
If you have any comments or questions – please list them below.
