We’re in the final stretch of summer and school will soon be underway again. I have two kids going into their first year in middle school and it’s hard to believe. Just as Luke Bryan says in one of his songs, “The days go slow and the years go fast.”
That aside, let’s get to today’s topic: Should you refinance your home?
Because rates have been so low for so long, many of you may have already taken the steps to refinance your home. If you’re among the homeowners who have yet to refinance, the news only gets better: Rates have dipped once again.
To help you gain a better understanding if you’re unsure why you should refinance, there are three reasons homeowners do this:
- To lower their payments
- To shorten the life of their loan (e.g., from a 30-year to a 15-year loan)
- To take money out for reinvestment, to make home repairs, etc.
You might be wondering, “How much does it cost to refinance?” According to The Lenders Network, it costs about 2% to 4%, but that’s pretty generalized as there are quite a few moving parts at play.
“If you’re among the homeowners who have yet to refinance, the news only gets better: Rates have dipped once again.”
Is it worth it to refinance your home? Personally, I think the answer to this question matters most of all. Frankly, it depends on how the aforementioned numbers shake out.
For the sake of argument, let’s say it’ll cost you $15,000 to refinance your home, but on the other hand, it’ll shave roughly $400 off your monthly mortgage payment. If you take that $15,000 and divide it by $400, the math works out to about 38 months, which is your “breakeven” point.
In other words, if you plan on staying in your home for more than 38 months, it makes perfect sense to refinance. So, if you don’t plan on living in your home that long, refinancing is probably contrary to your interest.
As of right now, rates have yet to start climbing again, but they won’t stay where they are forever. If you’re in the 5% range or higher, it makes sense to at least explore your options and see if refinancing is right for your situation.
As always, if you have any questions or would like additional information on refinancing your home, please give me a call or shoot me a text or email. We’ll talk to you soon!