Owning a home is a huge part of an individual’s financial picture. A mortgage is typically the single largest investment an individual or family will make in their lifetime. I often get asked about when it’s the right time to consider refinancing an existing mortgage. There are a lot of considerations that factor in this critical decision, including term (number of years), rate, the individual’s personal financial situation, economic conditions, job stability, and more. That said, it is always appropriate to periodically evaluate a mortgage, and even more so in an interest environment like the current one.
I was looking on the internet recently and noticed that mortgage rates for refinancing are as low as 1.75% for a 15-year fixed mortgage. On a $250,000 mortgage, the payment for principal and interest would be $1,580.15 without any escrow for taxes and insurance. A similar term at a rate of 2.75% (which is a great rate historically) would be $1,696.55. The source that I used is one that is very familiar in the mortgage and finance industry: BankRate.com. This site has nationally accredited lenders that have several options for a client to consider but is one of many sites that provide access to multiple lenders.
In this evaluation, please be cognizant of closing costs, fees, escrow, and other factors that will influence the payment that a household will incur. There are numerous mortgage/financial calculators available online that can assist with this evaluation. If you have a financial advisor or other financial professional (including mortgage brokers and real estate agents) who assists with your finances, they can run that analysis for you with little effort.
Eric Wimbush, CFA
Director – Operations
Seraphim Wealth Advisors, Inc