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Does Refinancing Make Sense With Rising Interest Rates?

Date: 
Author: 
Chad McGlothlen
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The short answer is….maybe.  As a general rule, the faster you pay down your loan, the LESS you will pay in interest, SAVING you money over the long haul. Take a look at your current financial situation to understand if it makes sense to refinance your current loan and pay it off sooner.

Refi or Redefine?

Even though mortgage rates are likely to go up in the near future, they are still at historical lows, making now a good time to lock in a great fixed rate. Consider refinancing to a shorter term if you can lower your interest rate at the same time. 

Refinancing could save you money in the long run if:
  • The new rate is lower than your current rate,
  • The term is shorter than your existing loan, and
  • The closing costs and fees don’t outweigh the long-term savings.
If you’re not lowering your interest rate as part of the refinance, it may be better to forego the refinance and rethink your current payment strategy. Simply sending in a little extra every month towards your principle can often accomplish the same goal. You’ll be pleasantly surprised by how quickly that additional money adds up and shortens the life of your loan. 

Borrower Beware

As with any purchase or advisor, when thinking about refinancing your home, make sure you do your homework to find the right fit for your needs and objectives. Some lenders may try and convince you to refinance at all costs. Why? Because they only get paid when a transaction occurs! 
 
Shop around for a lender who is more than just transactional. Find someone who takes the time to understand your financial goals and figures them into the equation when providing guidance and advice.
 
If you’re looking to save money long term, re-financing your home in the country or small town before interest rates go even higher could be a good choice for you. We would be happy to walk you through your options and provide our expert advice at no charge. Our team members live and work in the communities we serve and are passionate about providing the right answers for every client’s unique situation.
 
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