Should I Refinance My Home?

With the recent lower interest rates, many homeowners are wondering if they should refinance.

To decide if refinancing is the best option for your family, start by asking yourself these questions:

Why do you want to refinance?

There are many reasons to refinance, but here are three of the most common ones:

  1. Lower your interest rate and payment – This is the most popular reason. If you have a 5% interest rate or higher, it might be worth seeing if you can take advantage of the current lower interest rates, hovering below 4%, to reduce your monthly payment and overall cost of the loan.
  2. Shorten the term of your loan – If you have a 30-year loan, it may be advantageous to change it to a 15 or 20-year loan to pay off your mortgage sooner.
  3. Cash-out refinance – With home prices increasing, you might have enough equity to cash out and invest in something else, like your children’s education, a vacation home, or a new business.

Once you know why you might want to refinance, ask yourself the next question:

How much is it going to cost?

There are fees and closing costs involved in refinancing, and Lenders Network explains:

“If you were to refinance that loan into a new loan, total closing costs will run between 2%-4% of the loan amount.”

They also explain that there are options for no-cost refinance loans, but be on the lookout:

“A no-cost refinance loan is when the lender pays the closing costs for the borrower. However, you should be aware that the lender makes up this money from other aspects of the mortgage. Usually pay charging a slightly higher interest rate so they can make the money back.”

If you’re comfortable with the costs of refinancing, then ask yourself one more question:

Is it worth it?

To answer this one, we’ll use an example. Let’s assume you have a $200,000 home loan. A 4% refinance cost will be $10,000. If you want to lower your interest rate from 6% to 4%,  then refinancing is going to save you $244 per month. To break even ($10,000/$244), you need to continue owning your home for over 40 months.

Now that you know how the math shakes out, think about how much longer you’d like to own your current home. If you plan to stay for more than 3 years, then maybe it is advantageous for you to refinance.

If, however, your current home does not fulfill your present needs, you might want to consider using your potential refinance costs for a down payment on a new move-up home. You will still get a lower interest rate than the one you have on your current house, and with the equity you’ve already built, you can finally purchase the home of your dreams.

Bottom Line

There are many opportunities for growth in the current real estate market. To find out what’s right for your family, let’s get together to help you understand your options and guide you toward the best decision.

Related posts

You May also Like this

Looking to the Future: ...

[vc_row][vc_column][vc_custom_heading text="Looking to the Future: What the Experts Are Saying"][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]As our lives,...

Everybody Calm Down! This ...

[vc_row][vc_column][vc_custom_heading text="Everybody Calm Down! This Is NOT 2008"][vc_column_text]Last week realtor.com released the results of...

[vc_row][vc_column][ultimate_heading main_heading=" How to Judge the Impact of the Next Economic Slowdown...

Why Now Is the ...

[vc_row][vc_column][ultimate_heading] Why Now Is the Perfect Time to Sell Your House [/ultimate_heading][vc_column_text]As...

How to Increase Your ...

[vc_row][vc_column][vc_column_text] How to Increase Your Equity Over the Next 5 Years [/vc_column_text][/vc_column][/vc_row][vc_row...

3 Powerful Reasons to ...

[vc_row][vc_column][ultimate_heading margin_design_tab_text=""] 3 Powerful Reasons To Buy A Home Now [/ultimate_heading][vc_column_text]Whether you...

4 Tips to Sell ...

[vc_row][vc_column][vc_column_text] 4 Tips to Sell Your Home Faster [/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Since June of last...

4 Tips for Making ...

[vc_row][vc_column][vc_column_text] 4 Tips for Making a Competitive Offer [/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text] So, you’ve been...

New Research Shows Housing ...

[vc_row][vc_column][vc_custom_heading text="New Research Shows Housing Is Affordable For First-Time Buyers "][vc_column_text]Home prices...

A Lack of Inventory ...

[vc_row][vc_column][vc_column_text] A Lack of Inventory Continues to Impact the Housing Market [/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]The...

Mainstream Concerns about an ...

[vc_row][vc_column][vc_custom_heading text="Mainstream Concerns about an Economic Slowdown Revisited"][/vc_column][/vc_row][vc_row][vc_column][vc_column_text] Recently, we  that many believe...

The Benefits of a ...

[vc_row][vc_column][vc_custom_heading text="The Benefits of a 20% Down Payment"][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]If you are in the...

Buyer Demand Surging as ...

[vc_row][vc_column][vc_custom_heading text="Buyer Demand Surging as Spring Market Begins" font_container="tag:h1|text_align:center" use_theme_fonts="yes"][vc_column_text]Last fall, some...

Why Pet-Friendly Homes Are ...

[vc_row][vc_column][vc_column_text] Why Pet-Friendly Homes Are in High Demand [/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]One of the many...

Your Tax Refund Is ...

[vc_row][vc_column][vc_column_text]According to data released by the Internal Revenue Service (IRS), Americans can  an estimated average...

Is Your House Priced ...

[vc_row][vc_column][vc_column_text] In today’s real estate market, with more houses coming to market...

7 Reasons to List ...

Every year at this time there are many homeowners who decide to...

Why Has Housing Supply ...

According to the latest  from the National Association of Realtors (NAR), the inventory of homes...

Taking Fear Out of ...

A considerable number of potential buyers shy away from jumping into the...

2 Factors to Watch ...

2 Factors to Watch in Today's Real Estate Market Whether Buying or...

Are We About to ...

Are We About to Enter a Buyers’ Market? Home sales are below...

Why Have Interest Rates ...

Why Have Interest Rates Jumped to a 7-Year High? Interest rates for...

Dreaming of a Luxury ...

If your house no longer fits your needs and you are planning...

1900 NW 41st st ...

[vc_row][vc_column width="1/4"][vc_column_text]1900 NW 41st st Oakland Park FL 33309 Beautiful spacious 4BR...

Why Getting Pre-Approved Should ...

In many markets across the country, the number of buyers searching for...

Post your Comments

NAME *
EMAIL *
Website