With interest rates still has near-historic low levels but edging upwards, many homeowners are considering refinancing their mortgages. Although refinancing could be a smart move, is it the RIGHT move for you?
One big question homeowners need to ask themselves before jumping into refinancing is â€œhow long do I/we plan on living in this house?â€ If the answer is â€œnot for too longâ€ then refinancing may actually cost more than it saves.
Letâ€™s say you plan on moving in three years. Your lender would charge you $2000 in fees up front, and refinancing would save you $50/month. If you divide theÂ $2000 by the 36 months you plan on being there, the refinancing fees end up costing a little over $55 each month ofÂ time you plan on staying. If you are saving $50/month on interest, you are actually PAYING $5/month to refinance!
Refinancing CAN save you quite a bit of money, but there are other factors that need to be taken into consideration other than a lower interest rate. Because everyoneâ€™s situation is different, the best bet is to talk to a trusted mortgage specialist and ask questions.