Time to Refinance?
Yes, interest rates are at near record lows! Last week ending June 12, 2020, mortgage applications were up 4% from the previous week and up almost 21% year over year. The most common reasons borrowers refinance include: lowering interest rate or reducing length of their mortgage, home improvements, locking in a fixed interest rates if you have an Adjustable Rate Mortgage (ARM) or converting to an ARM if rates increase, escaping a mortgage with a balloon provision and no conversion option, or consolidating debt.
Calculating your savings…
Figure the following to help decide if a refinance is a good idea for you:
1. current monthly payment
2. original cost of the home
3. itemized refinancing costs
4. monthly payment after the refinance
5. how long you plan to live in the house after the refinance
6. amount owed on the house
7. the break-even point (total cost of the refinance divided by monthly savings on payments)
Many online calculators provide refinancing data:
Check out: Nerd Wallet Free Refinance Calculator and Smart Asset Refinance Calculator
Plan carefully when you refinance:
Close your credit card accounts after consolidating debt. Make home improvements right away. Leave some equity in place for your security.