How to Know When It's Time To Refinance
✉️ Want to forward this article? Click here.
With interest rates dipping to historic lows, many homeowners are likely thinking about refinancing their home mortgages.
So, how do you know when to pull the trigger? Some believe that a good measuring stick is to wait until mortgage rates have dropped 1 percent below the rate you locked in when you bought your home; others urge owners to balance the cost of refinancing — often as much as $7,000 — with how much they will save every month at the new rate. Mortgage consolidation and refinancing calculators like this one can also be helpful tools.
UrbanTurf reached out to Wells Fargo mortgage loan officer Matt Rexrode for some more advice on how to know when the time has come:
It really depends on the ultimate goal for a refinance. While some borrowers are refinancing into a new 30-year fixed mortgage to save the most money each month, many people these days are refinancing into a shorter term loan. While they may not see much, if any, monthly savings, they end up saving tens of thousands of dollar worth of mortgage interest over the life of their loan. If saving the most money each month is the goal, one should wait for rates to go down around 1 percent from their current rate. However, if you have a higher balance loan ($500,000 and up), it may be worth exploring a refinance with a rate that is around 0.75 percent lower. We’re seeing borrowers who are 2-3 years into their current mortgage, but do not want to start over again at 30 years. For those people, we end up doing a 27-28 year loan with a lower rate and they still may end up saving some money each month.
Those considering refinancing should also take into account the time they plan on living in the home. You can do a cost benefit analysis of the interest saved and/or reduced monthly payment versus the costs of doing a refinance and see how long it will take to make back the refinancing costs. In most cases, if someone plans on staying in their home another 3+ years, it’s worth having a conversation with a loan officer.
See other articles related to: mortgage rates, refinancing
This article originally published at https://dc.urbanturf.com/articles/blog/how_to_know_when_its_time_to_refinance/6171.
Most Popular... This Week • Last 30 Days • Ever
A single home has come up for sale at Beale Square: an acclaimed, carriage-style town... read »
Estate taxes, also known as inheritance taxes or death duties, are taxes imposed on t... read »
In this article, UrbanTurf will explore the considerations and steps involved in buyi... read »
The application may signal movement on the massive mixed-use project.... read »
Washingtonian is reporting that the national bookstore chain will open its doors the ... read »
- A Uniquely Private, Carriage-Style Townhome Hits the Market in Bloomingdale
- What Are Estate Taxes and How Do They Work?
- How An Unmarried Couple Buys a Home Together
- Raze Application Filed For Site Of 900-Unit Development, Food Hall Along Anacostia River
- Barnes and Noble Returns To Georgetown Next Week
DC Real Estate Guides
Short guides to navigating the DC-area real estate market
We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Start browsing below!
First-Timer Primers
Intro guides for first-time home buyers
Unique Spaces
Awesome and unusual real estate from across the DC Metro