Everyone is refinancing! Or at least thinking about it. We all have a friend, or a friend of a friend who saved “a ton” of money on their monthly payments. So is now a good time for you to refinance your home? Well, with interest rates pretty close to record lows then, yes, it may well be.
But, before you take the plunge, you really should consider these five key factors.
Refinancing can cost anywhere between 3% and 6% of the loan amount. Sure, with a lower interest rate you will be saving on your monthly payments, keep in mind how much it is costing you to switch. Some lenders may offer “no-cost” finance, but that will most likely mean a higher interest rate on the loan. It may be possible to add those costs to the loan itself and therefore just pay them off over the term of your new mortgage. It is worth taking time to work out how long it will take for your monthly savings to cover the cost of the switch. It is also smart to shop around and check what deals are on offer. Also, you don’t necessarily have to accept the initial terms. This is a competitive market where lenders could be open to a reduction in fees.