If you're staying put, it’s not too late to refinance.
Mortgage rates are no longer at rock bottom—2013 saw rates of 3.24 percent—but they’re still low enough that you should consider refinancing. If your interest rate is currently 5 percent or so, even a 4 percent mortgage would lessen your payments, says Mari Adam, a certified financial planner in Boca Raton, Fla.
HSH.com, which publishes mortgage and consumer loan data, has a refinancing calculator that can help you decide whether a refi makes sense. You fill in the details about your current loan and the deal you’re considering, and it estimates how much less your monthly payments will be, how much you’ll save with the new loan, and how long it will take you to break even—in other words, recover your closing costs. A refi doesn’t make sense if you plan to move before your break-even date.
One warning from Adam: Avoid taking out money when you refinance—a problem that caused many loans to go underwater when the recession hit. “Cash-out refinancing is the sharpest knife in your butcher block; it can be dangerous,” she says. “I’ve seen too many people take money out to pay off debt, then continue to run up more debt.” A much better reason to refi, she says, is to shorten the term—say, from a 30-year fixed loan to a 15-year, and to reduce your interest rate.
Author:Darik Steinbach Phone: 952-239-4290 Dated: April 28th 2015 Views: 311 About Darik: I have been selling residential real estate in Minneapolis full time for 10+ years.
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