When is Refinancing Your Mortgage Actually Worth it?

Posted by Austin Shumaker on Dec 1, 2019 9:41:00 PM
Austin Shumaker
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Interest rates have gone and done it again; they've dropped. Considering refinancing your current mortgage with a new one at a lower interest rate? You could reduce your monthly payments and more importantly, the total cost of your loan. That means you keep more of your hard-earned cash where it belongs, in your pocket to do the things that matter most to you.

Refinancing a mortgage means replacing your existing mortgage with a new one. Your new mortgage pays off your old one, and you’re then responsible for paying off your new mortgage. But, when is the time right?

Scenario 1:

The traditional rule of thumb is an interest rate decrease of 1% or more. However, each borrower's situation is different. Your financial situation could have drastically changed since the original purchase loan causing your mortgage insurance to be significantly cheaper leading to more savings beyond just the interest rate. You could only be decreasing your rate by .5% but be saving much more in the long term.

 

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Scenario 2:

Let's say you'd like to pay off some of those high interest rate credit cards that've been nagging, remodel your home, or pay college tuition. You have the ability to take cash out of your home up to 80 percent of it's value!

 

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Scenario 3:

Something else to consider, is moving from a 30-year mortgage to a 20 or 15-year mortgage. It could save you tons over the life of the loan and help you payoff that house much faster.

Another thing to consider is, if you're currently in an adjustable rate mortgage, you may want to consider moving to a fixed rate while rates are at historic lows.

Chat with one of our loan officers today!

337.806.9940

 

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