To Refi or Not to Refi? That is the Question

Interest rates are at historic lows.  I’m sure everyone has seen the ads promoting refinancing home mortgages.  It’s always smart to look at ways to save on monthly expenses.  That being said, when does it make sense to refinance a mortgage?

Saving money is a great reason to refinance a mortgage.  Lowering monthly payments means more money for other things like investing in retirement accounts, saving for college, investing in home improvements.  A lower interest rate means that a borrower’s monthly mortgage expense will go down.

Shortening the term on a mortgage is a great reason to refinance.  Imagine moving from a 30 year mortgage to a 20 year, or a 15 year, or a 10 year sounds incredible.  The shorter the term on a mortgage the less interest a borrower pays.  Additionally, on a shorter term mortgages a borrower is chipping away a larger chunk of the principle right away.  In California we all pay a significant amount of money towards housing.  Life without a mortgage payment is something we should all look forward to in life.

Consolidating debt is also a good reason to refinance.  The interest rate on a mortgage is less than a credit card.  That being said, it doesn’t make a lot of sense to tack on a bunch of years to a house payment just to payoff credit card debt.

If you’re nearing the end of your mortgage term it probably doesn’t make sense to refinance your mortgage.   The end of the term means that you’re paying mostly principle anyways.  Always consult with a proven mortgage lender before making any decisions.  We’re always happy to introduce you to the great lenders that we have worked with over the years.  It might make sense to take advantage of record low interest rates!