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What if interest rates drop significantly after you obtain a mortgage? Many people refinance to take advantage of lower rates to reduce their payments or obtain a shorter term loan.
Are you ready to refinance? The answer usually depends on your reasons for doing so. Lower interest rates mean lower payments. But you have to weigh the upfront costs of refinancing against the potential savings in your monthly payment. A common rule of thumb is to try to recover the cost of refinancing within two years. But, with no-cost refinance options now widely available you might want to consider the impact on your long-term costs.
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