Should you refinance with today’s historically low rates?

Many experts will tell you shouldn’t refinance unless you’re saving 1% lower in rate. With today’s interest rates being on average below 3%  here’s how you should determine whether refinancing for you and your family makes sense or not…

Stop paying attention to all of the internet articles and all the so-called financial experts out there. It’s your mortgage, your house, your money, your bills, and ultimately your budget. Only you can decide. So please take what you hear on the internet with a grain of salt.

On average 30-year mortgage is right now with excellent credit conventional loans are under 3% for a single-family home. As an example, let’s say have a 3.75% 30 or fixed-rate mortgage and you can go to 2.75% on a new 30-year fixed-rate mortgage. You’re going down 1% in rate which translates to approximately $300 to $400 a month on most loan amounts. Taking the consideration closing costs of approximately $3k which is average closing costs on most loan sizes, and you have a speedy recapture. Generally, it doesn’t take much to realize such an opportunity would unequivocally make sense.

What about starting the clock over? Well, whenever you refinance your house and do a new 30-year mortgage you always start the clock over no matter what the experts tell you. There are two ways to offset this, the first way is to make the same payment on the new loan you were previously making on the loan you just paid off. Doing so would enable you to subsequently prevent starting the clock over while paying less and interest over the total term of the loan. The other is to have the lender you’re working with specifically amortize the loan based on the loan you’re refinancing.

et’s be clear getting a mortgage is really not the most fun thing in the world to do it is paperwork intensive, you have to be accountable to time frames. The savings ought to be in alignment with the paperwork. Simply put, it should be justified.

While there are some companies out there that have robust online lending platforms, at the end of the day don’t be fooled it’s still the same paperwork every mortgage company in America needs.

If you’re getting a refinance offer where you’re not paying any closing costs, make sure it is specifically no cost. Don’t let a lender doop you into a  situation where you’re just rolling the closing costs into the loan, inflating the loan balance and, call that a no-cost loan. A good rule of thumb is you need to save at least $200 a month when refinancing, go into a shorter-term loan, or save at least 1% in interest if you’re going to paying fees. If you’re not paying fees those numbers can very easily go down and then it would be up to you to determine whether or not the opportunity makes sense.

Looking to refinance? Get a no cost quote now!

RELATED MORTGAGE ADVICE FROM SCOTT SHELDON

Side-by-side comparison of FHA and conventional loans with highlights of key differences, including PMI and down payments

FHA Loan vs. Conventional Loan: Which Is Best for Your Home Purchase?

Deciding between an FHA loan and a conventional loan for your home purchase is an…

Image of a modern house with a document titled 'Refinance Agreement' and a split keychain symbolizing a divorce settlement. The scene includes subtle financial elements like a calculator and pen, emphasizing the mortgage refinancing process

How to Structure a Divorce Buyout as a Limited Cash-Out Refinance with Fannie Mae

Divorce is already an emotional and challenging process, and figuring out how to handle property…

A vibrant depiction of the Sonoma County real estate market, showcasing modern single-family homes surrounded by vineyards and rolling hills under a clear blue sky, symbolizing opportunities with the 2025 conforming loan limits increase.

2025 Conforming Loan Limits Rise: Boosting Opportunities for Sonoma County Homebuyers and Sellers

2025 Conforming Loan Limits: What It Means for Sonoma County Buyers and Sellers The Federal…

Graph showing mortgage rate trends over time with a highlighted target strike rate, accompanied by a calculator and pen, symbolizing refinancing decisions

How to Decide Your Strike Rate for Refinancing: A Guide to Market Improvements and Timing

When it comes to refinancing your mortgage, knowing your strike rate—the interest rate at which…

View More from The Mortgage Files:

begin your mortgage journey with sonoma county mortgages

Let us make your mortgage experience easy. Trust our expertise to get you your best mortgage rate. Click below to start turning your home dreams into reality today!