Interest rates may be rising, but they’re still low—and, as such, many homeowners may be considering refinancing their mortgages to lock in a lower rate.
Refinancing can be a great way to save money on your mortgage, but it’s not the right move for everyone.
So how, exactly, do you know if refinancing is the right decision for you?
A recent article from realtor.com outlined key questions to ask before refinancing to determine if it’s the right financial move, including:
- What are the closing costs? While refinancing can save you in the long run, there are costs you’ll need to cover at closing—typically 2 to 3 percent of the loan amount. Before you decide to refinance, make sure you know how much cash you’ll need to have on hand to close.
- Are there any additional upfront costs? In addition to closing costs, some loans will have additional upfront costs (for example, insurance or a property survey). Before you commit to refinancing, make sure you have a clear understanding of any and all upfront costs you’ll incur.
- How long is the loan term? When you refinance your mortgage, it’s essentially getting a new loan—and that means new loan terms. Generally, refinances have a loan term of anywhere between 10 and 30 years, so make sure the term aligns with your goals (and how quickly you want to pay off your home).