Mortgage rates have been dropping (Hallelujah! 🙏)
The question everyone is now wondering: “Should I refinance??”
Refinancing your mortgage and securing a lower interest rate can mean substantial long-term savings.
But deciding whether to refinance your home depends on several factors…
🔖 Here’s how to evaluate if it’s a good time to refinance:
YOUR CURRENT RATE
A general rule of thumb is to refinance your mortgage when interest rates are at least 1% lower than your current rate.
COSTS OF REFINANCING
The cost to refinance your mortgage can range from 2% to 4% of the loan amount. You want to be sure that potential savings will outweigh total closing costs.
YOUR “BREAK-EVEN” POINT
Your break-even point is when you will recoup all the closing costs that come with refinancing your loan. For example, if your closing costs are $5,000 and your monthly savings from refinancing is $200 per month, it would take you 25 months to break even.
YOUR FUTURE PLANS
If you plan to stay in your home for several more years, refinancing could be a smart move, but if there’s a good chance you’ll relocate before reaching your break-even point, it’s worth reconsidering.
DM me for a link to Freddie Mac’s mortgage refinance calculator and I’ll send it over!