Reasons it may be a good time to refinance your mortgage.
Mortgage rates are finally going down. If you bought a home when rates were above six percent, now might be a good time to refinance your mortgage. Here are some things to consider.
Interest Rates
Currently, the interest rate on a 30-year, fixed mortgage is around 6.9 percent. Just three months ago, the same mortgage had an average rate of 7.3 percent. Doesn’t seem like much, right? Well, if you had a $300,000 mortgage at 7.3 percent, refinancing now would save you about $100 a month and over $2,300 on the total loan.
Refinancing Math
Find your mortgage interest rate, then note the current rates. If the current rates are lower than your mortgage rate, it may be a good time to refinance. This is especially true if you plan to stay in your home for many years. You want to stay in your home long enough that the savings from refinancing are bigger than the cost of closing.
Other Considerations
If you’re considering refinancing, use a refinancing calculator to view your potential savings. You can always go talk to someone at your bank or credit union for an estimate of costs and savings. Remember to consider refinancing costs, which are usually between two and six percent of your outstanding principal balance.
Do One Thing: Shop around for the best possible refinancing deal. Get at least three quotes from potential lenders to make sure your savings are worth it.
Article by Chris O’Shea, Savvy Money.
