Should You Refinance Your Mortgage?
Right now, interest rates on home mortgages are at the lowest level in decades, if not ever. If you can get it, going for a lower interest rate might be the most beneficial thing you can do to help you get over some financial humps and get things done.
A real life story came up yesterday while my wife and I were at a regional farmer’s market. There’s one lady there who makes the best chocolate chip cookies, and we always buy from her. She had an extra big smile and started telling my wife her story about being approved for refinancing her mortgage.
She went for a 15-year mortgage, where the interest rate was 3.75%. I don’t know how the rest of this actually worked because I thought it would be rude to ask, but she was granted the new mortgage, it earned her enough money so that she was able to pay for a new roof for the home and some other improvements she’d been wanting to do, and her monthly payments actually went down $350 a month.
I’m not sure where she started from, but I’m assuming she must have had a much higher interest rate than the 5.75% my wife and I have after we took advantage of what at the time were lower interest rates than what we’d bought our house at. We ended up reducing our payments about $200 at the time, but didn’t get the other money bonus this lady did. Then again, we’d only had the house 2 years at the time, so there was no real equity built up either.
At the very least if you have some equity in your home and an interest rate higher than 7%, it’s worth exploring your options to see if there are both money and some savings to be had.