If you’re a homeowner, you might think that all the recent talk of low mortgage rates doesn’t affect you. But that isn’t true — they may be your key to savings.
Even if you had a sizable down payment or received a competitive interest rate at the time, refinancing your home now could mean saving thousands over the life of your loan. Ask yourself these four questions before making up your mind:
- Have your finances improved? If you have a better financial profile now than when you bought your home, you may be able to make a larger monthly payment with a lower interest rate, speeding up your mortgage repayment. If your credit score has improved or you have a higher income, this applies to you.
- How much have interest rates dropped? Mortgage rates fluctuate with changes in the economy. You may be able to obtain a more cost-effective mortgage today than when you first purchased the property, even if rates have only dropped by a percentage point.
- How much will refinancing cost? The process will likely cost you a percentage of the amount you borrow. Remember the application and appraisal fees when you bought your home? They apply here too. Another thing to consider: If your home interest payment is a tax deduction, a decrease in your interest amount could lower that deduction.
- How much longer will you be in the home? If you’re not planning to stay in your current home very long, and therefore won’t need to pay off the mortgage, refinancing shouldn’t be your top priority. Spending the time and money on that process won’t pay off like it would if you stay in your home for another 10 years or more.
Are you ready to refinance? Do you have specific questions about your situation? Reach out today.