Should I Refinance My Home Mortgage?

Posted by Julie Braunschweig on Oct 06, 2016 05:00:00 AM

Topic: ALL

Husband and wife looking over refinancing options on laptop

When interest rates stay consistently low, many homeowners begin to wonder if refinancing their existing mortgage makes sense.  Homeowners often ask themselves:

  • How do I know if it is financially sound to refinance? 

  • Are there certain times, reasons, or rules of thumb for when it would make sense to refinance my current mortgage?

While saving money is a common reason to refinance, not everyone’s goal is the same. To best determine if it makes sense for you to refinance start by defining what you want to accomplish by doing so. Some common reasons include:

  • Saving money

  • Owning your home quicker

  • Reducing your monthly payments

Once you define your goal for refinancing, you can work with a Loan Officer to see if it makes sense for you.

If your goal is to pay off your mortgage quicker, you should first consider if paying a higher payment on your current mortgage could accomplish the same goal. Be sure to factor in the closing costs associated with taking out this new mortgage.

If you are looking to save money by refinancing, you should also consider the closing costs associated with the refinanced mortgage. Calculating how long it will take to recover those costs will help determine if any money will actually be saved.  If the closing costs will take longer than two years to recover based on the amount saved monthly, you may want to reconsider. 

Other questions you should answer include:

  • How long do you plan to have the mortgage? 

  • How long do you plan to stay in the home? 

Anyone who is thinking of selling their home should understand that the money added onto the mortgage with refinance closing costs will be less money they will have in their pocket when they do sell.

If you are looking to refinance your mortgage, consult and Bank Mutual mortgage professional. Our experienced Loan Officers will help you run the numbers based on your goals and current financial situation.