With the recent talk of interest rates changing, it can be tempting to refinance your current mortgage to take advantage of today’s rate, incase rates go up.
But if you’re thinking about refinancing, then you’ll want to do more than simply compare your current rate to the refinance rate. Here are some other factors to look at:
1. The length of the mortgage term.
Remember, the goal of a mortgage is to ultimately own your home outright. Think twice before setting yourself back another 30 years just to have a little extra cash today.
2. Your future income.
This is especially important to think about if you’re considering refinancing from a 30-year mortgage to a 15-year in order to pay your home off sooner. In general, the shorter the repayment period, the higher the payments. Consider your future expenses and goals, like upcoming college costs, retirement and the certainty of your current income before you opt for a shorter mortgage.
3. The total cost of refinancing.
Many institutions charge closing costs for new loans, so make sure you’re still saving money AFTER factoring in applicable fees.
4. Plan for your monthly savings.
If you want to refinance to save money each month, consider your motives. Are you investing the money in a second property? Or are you simply looking for extra padding in your budget. If that’s the case, then you may want to consider areas of your current spending that you could cut back or eliminate.
If you’re thinking about refinancing, we’re here to help! At Washington Federal, we don’t sell our loans – unlike most banks. Why does that matter? Well, if rates fall in a few years, you might be able to lower the rate on your existing mortgage with us.
Best of all? This can be done without refinancing! So you don’t have to start over with your mortgage. And you can build equity faster and pay off your home on schedule. Talk to your local neighborhood loan officer or call us at 800-324-9375 to find out more.