Should You Refinance?

If you have ever thought about refinancing your home, now could be the time. With mortgage rates hovering around three percent, an all-time low, you are not likely to find anything lower this year or in the years to come. Refinancing can have many benefits such as lower monthly mortgage rates and a shortened loan term. However, in some situations, it can end up costing you more than if you stuck with your original loan. When weighing the options of refinancing, there are many factors to consider. This includes doing your homework regarding interest rates. If you currently have a six percent rate and you can refinance at three percent, the decision seems like a no brainer. However, you have to consider how long you are planning to stay in the home. If it is under five years, the closing costs you will have to pay will trump the money you are saving on interest and payments. The loan term is another factor to consider. If you are looking to lower your monthly payments, refinancing to a longer term will do that. Keep in mind that doing so will increase the overall amount of the loan, meaning you will pay more in the long run. Another reason to refinance would be if you need immediate cash. This is called a “cash-out refinance