With interest rates on the move and many homeowners feeling the pinch, refinancing your mortgage can be an innovative financial tool—but only if the timing is right. Here’s how to know when refinancing makes sense, and when it might not be worth the cost.
1. You Can Lower Your Interest Rate Substantially. If current mortgage rates are at least 0.75–1% lower than your existing rate, refinancing could save you thousands over your mortgage term, especially if you still have many years left.
2. You Need to Consolidate Debt. If you're juggling high-interest debt like credit cards or unsecured lines of credit, refinancing can help you consolidate into one lower monthly payment. This not only improves cash flow but can also simplify your finances.
3. You Want to Access Home Equity. Refinancing your home equity lets you use that capital for renovations, investments, or even purchasing additional property. Just make sure your new mortgage structure aligns with your long-term goals.
4. You Want to Change Your Mortgage Type or Term. Refinancing allows you to switch from a fixed-rate to a variable-rate mortgage or adjust your amortization period to fit a new budget or financial plan.
5. It’s Not Always the Right Move. Refinancing comes with costs: legal fees, potential prepayment penalties, discharge fees, and potential appraisal fees. Make sure the long-term benefits outweigh these short-term costs.
Reach out, and I can help you run the numbers objectively.