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Should you refinance your mortgage?

Is it time to refinance your mortgage?

Sept. 10, 2019

Maybe you've noticed: The cost of borrowing money to buy a home is way down.

Current rates on a 30-year fixed mortgage are well below 4%, down from above 5% percent last fall. So, if you bought a house in the last few years, you probably have a higher rate than what you can find right now.

"If you can shave half to three-quarters of a percentage point off your mortgage rate, it's worth looking into," said Greg McBride, chief financial analyst at Bankrate.com. "You want to see what's the break-even period - how long is it going to take to recoup the costs of refinancing through the monthly savings? For most homeowners, that's about two to three years."

Something else you might want to consider, especially if you're been in the house for a number of years, refinancing to a shorter loan—maybe a 15 or 20-year mortgage.

"The rate will be lower than what you would have on the 30-year fixed, but you also get the home paid off sooner, so it can add up to substantial interest savings," McBride explained. "The only thing is you have to make sure that the payment on that shorter-term loan is going to be a fit for your budget."

More Info: How to know when to refinance your mortgage

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