Mortgage Refinance: When is the Right Time?

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Refinance your mortgage to save money!
Mortgage refinance: is it the right time?

Interest rates for home loans have dipped historically low for quite some time now making folks consider a mortgage refinance. According to Freddie Mac’s Primary Mortgage Market Survey, rates for the week ending November 5 remained below 4 percent for both 30- and 15-year fixed-rate mortgages.

These low rates may get some current homeowners wondering whether they should consider refinancing their current home mortgage to save some money.

How is a mortgage adjusted?

Lowering an interest rate is the typical reason you might think of when someone refinances a mortgage. However, there are additional reasons behind the process. The Federal Reserve noted refinancing a mortgage can take on a variety of different forms. For example, you may want to increase or decrease the term of your mortgage.

In addition, you may want to switch from a fixed-rate mortgage to an adjustable-rate mortgage or from an ARM to a FRM.

Mortgage refinance – is it the best move?

While it might seem like there are plenty of reasons to refinance a home loan, it’s important you understand all of the terms and conditions. In addition, evaluating whether it’s the right time to refinance should be a major consideration.

According to Bankrate, refinancing a loan can actually cost more than it’s worth. It’s important to understand what you will wind up paying in mortgage closing costs. To determine if refinancing is a good option, calculate whether you will break even and when refinancing will pay for the closing costs associated with it.

By taking your total closing costs and dividing the total by the monthly savings, you will be able to determine your break-even point. This can help you decide whether it’s worth refinancing your current mortgage.

Reaching out to Dane County Credit Union to determine different rates available will also help you determine whether it’s worthwhile to refinance. The lower the interest rate, the better the savings.

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This post was written by our mortgage partner CU Realty.

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Jen M.

Jen has been with DCCU since 1999 not long after she graduated from UW Madison. As the Creative Director she helps share all the amazing things DCCU does in our community and spreads the credit union philosophy of People Helping People. When she's not creatively directing at work, she's busy directing 4 kids, 2 dogs and a cat at home. She formed her family through adoption and has a deep passion to support foster and adoptive parents and kids. Her favorite place to relax is poolside or in front of the fireplace.