Mortgage rates remain at levels that might have seemed unthinkable just two years ago. There are still thirty-year mortgage loans at rates well below 3%.
If you are a homeowner with an existing mortgage, you may want to consider refinancing any loan you took out during the pre-pandemic period. Chances are, you can get a much better deal now.
Refinancing at today’s historically low rates could save you a few thousand dollars a year in interest, and tens of thousands over your loan.
If you think it might be time to replace your mortgage with a new one, here are four tips for getting the most out of your refinance.
1. Make sure a refi is the right decision
Before committing to refinancing, there are a few important things to consider. Current basement mortgage rates may look good on paper, but depending on the terms of your existing mortgage, you may be subject to loan terms that could make refinancing a bad call.
Some mortgages come with a prepayment penalty, especially in the early years. You might also experience legal complications if you took advantage of a local government grant program, such as the one for first-time buyers.
Before you start considering loan refinancing, read your mortgage documents carefully to make sure you don’t get burdened with exorbitant fees. Next, make sure that refinancing doesn’t cost you more in the long run.
If your current mortgage is 30 years and you’ve already paid off half of it, refinancing into a new 30-year fixed rate mortgage could cost you tens or even hundreds of thousands of dollars in additional interest. It might be wise to opt for a 15-year loan instead.
2. Talk to a pro
A good way to make sure that refinancing is the right decision is to consult a professional. A certified financial planner could not only offer advice on your refi, but also help you create a retirement savings plan to suit your mortgage.
That way, once your home loan is fully paid off, you can rest easy knowing that you already have some spare change in reserve for your golden years.
Today, there are convenient online financial planning services that can give you top notch financial information without high fees.
3. Compare rates to find the right loan
Thanks to the lowest mortgage rates, nearly half of homeowners who refinanced between April 2020 and April this year are now saving $ 300 per month or more, according to a recent survey by Zillow.
With mortgage rates still low, you might be tempted to jump on the first refinance offer that comes along. But shopping around and comparing rates could save you even more on your new monthly payment.
You can do this the old-fashioned way, by researching local lenders and contacting them one-on-one about their rates, but it could be time consuming. A better option is to go online, review the offers of at least five lenders, and compare them.
And note that checking mortgage rates will never impact your credit score.
4. Protect your investment – and your family
After choosing your new loan, rethink your home insurance. Are you paying too much? Come back online, this time for several home insurance quotes, and make sure you have the right coverage at the right price.
And while it may not be pleasant to think about it, the possibility that something unexpected could happen to you – personally – is important to consider as a homeowner. You want to make sure that your family doesn’t have to worry about how they’ll make mortgage payments in the unlikely event of your death.
The best way to keep your family financially secure is to purchase a life insurance policy. The idea of ââshopping for life insurance may seem a little uncomfortable, but a good online comparison site can make the process painless.
It never hurts to be prepared. Depending on your age and where you live, you might find a policy that offers your loved ones $ 1 million in financial protection for less than $ 7 a week.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.