by Glenn J. Downing, MBA, CFP®
With mortgage rates so low, we’ve been looking at mortgage refinancing for a few of our clients lately, to see if it might be in their best interests. Here’s what we know:
I’ve written two related blog posts that you might find useful: Should I Pay My Mortgage Off Early? and The Fifteen Year Mortgage.
There is a 2% rule of thumb out there, and I do believe it is largely true – namely, that it makes sense to refi when there is a 2% drop from your current rate to your new one. Refi for a lower payment if you need to, but we’d prefer you to refi to a shorter payoff period, and keep your payment the same.
If you’re down to the last 5-7 years of your mortgage, you’re paying very little interest – mostly principal. It generally won’t make sense to refi.
So have a look – if you’re paying in the upper 4%s for your current mortgage, it might be time to re-evaluate. We know several terrific mortgage brokers we’re happy to recommend. Please know that if we do make a referral, there is no quid pro quo: we never pay nor receive referral fees.)
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