Mortgage rates continue to linger at historically low levels, which has caused a lot of people to refinance. If you’ve been considering it, we are stretching your dollar with a look at how to know if a refinance makes sense for you.
First, ask yourself how much you will save with a new loan. You want it to be at least a percentage point or two below your current loan.
But that’s not the only factor, ask yourself if the new rate will chop your monthly payments. Remember to factor in closing costs.
And think about how long you plan to live in the home- is a new loan worth pursuing?
As you consider these factors, you can determine when you’ll break even and start feeling the savings.
Remember, if the process costs you $3,000 but saves you $100 a month, it’ll take 30 months to feel the savings.