The low interest rates available might encourage you to consider a refinance. In many cases a refinance will benefit the homeowner, but sometimes it can not be worth the lower interest rate because of high closing costs. Here are some tips to use when determining if now is a good time to refinance:
- Make sure you plan to be in your home for a while. Closing costs on a $200,000 loan is an average of $3,118, which does not include taxes, insurance, and any prepaid items like homeowners association dues.
- Find out how many months of lower payments it would take to recoup the closing costs. You can do this by using a refinancing calculator.
- If your goal is to extend the mortgage as well as get a lower interest rate, then realize that you may end up paying more in interest over the life of the loan.
- Refinancing can be helpful if you are needing to get out of an adjustable-rate mortgage, interest-only mortgage, piggyback mortgage, or other burdensome mortgage provisions.
It is not a good enough reason to spend the time and money refinancing your mortgage just to brag to your friends about your low interest rate. Analyze your goals and see if a lower interest rate will get you there.
Please give us a call to learn about some mortgage lenders in the North Atlanta area that would be glad to sit down with you and discuss your options.