Should you refinance for less than half a percent difference on your current loan?
You’ve probably heard that interest rate are at record lows and if you’re current rate is one percent higher than today’s rates then we would usually say refinancing is a no-brainer. But what if you already have a low rate and its less than half a percentage point less than your current rate, should you refinance then?
There are a few key factors to consider.
1. Do have an Adjust Rate (ARM) Mortgage?
Getting into a lower fixed rate mortgage can definitely make sense in this case as you’ll lock in a lower rate, as the ARM rate may rise in the future.
2. Do you have a high loan balance?
If your loan balance is $500,000 a quarter percent difference could mean over $300 dollar less in monthly payments!
3. Do you plan on staying in the house more than a few years?
There will be closing costs to pay when you refinance so in order to get see the savings you’ll generally need to stay in the house for a few years.
Of course when in doubt make sure to contact us, we can crunch the numbers see how much you’ll save and if it makes sense for you!