At the end of October 2019, the Federal Reserve – the organization responsible for setting mortgage interest rates – decided to cut rates for the third time this year, resulting in some of the lowest interest rates we’ve seen in a while. This has led many homeowners to wonder if now is a good time for them to refinance their mortgage.
If you’ve been thinking along those same lines, Tara Mastroeni, contributing writer for Forbes magazine lays out 3 scenarios where refinancing your mortgage might makes sense.
You can get a better interest rate
There’s no getting around it: The interest rate that you’re given will play a significant role in how much you’ll pay each month and over the life of your loan.
For example, if you put 20% on a $200,000 home with a 30-year loan, at a 4% interest rate, you would pay around $763 per month. At a 4.5% interest rate, you would pay around $810 per month. That’s a difference of $47 per month or $564 per year.
As of November 21, 2019, interest rates are at 3.72%. If you’re current interest rate is higher, you may benefit from refinancing, especially if your credit score and overall financial situation has also improved since you last applied for a mortgage.