With interest rates still has near-historic low levels but edging upwards, many homeowners are considering refinancing their mortgages. Although refinancing could be a smart move, is it the RIGHT move for you?
One big question homeowners need to ask themselves before jumping into refinancing is “how long do I/we plan on living in this house?” If the answer is “not for too long” then refinancing may actually cost more than it saves.
Let’s say you plan on moving in three years. Your lender would charge you $2000 in fees up front, and refinancing would save you $50/month. If you divide the $2000 by the 36 months you plan on being there, the refinancing fees end up costing a little over $55 each month of time you plan on staying. If you are saving $50/month on interest, you are actually PAYING $5/month to refinance!
Refinancing CAN save you quite a bit of money, but there are other factors that need to be taken into consideration other than a lower interest rate. Because everyone’s situation is different, the best bet is to talk to a trusted mortgage specialist and ask questions.