When Should I Refinance My Mortgage? And Other Mortgage Reminders. [Video]
by Rob Stoll, CFP®, CFA Financial Advisor & Chief Financial Officer / January 20, 2020
Getting the right mortgage is one of the bigger financial decisions your family will ever have to make. So if you are thinking about refinancing your mortgage, let me give you a couple tips for what you should be looking for.
Shorten The Term Of Your Mortgage
The first tip is to look at SHORTENING THE TERM OF YOUR MORTGAGE.
So, if you originally took our a 30 year mortgage, and you’ve already paid off five years of it, while you’re going to refinance, look and see if you could afford getting into a 15, 20, or 25 year mortgage.
Most companies are pretty flexible with the terms, so I’d recommend looking at that because that could help save you a lot of interest down the road.
Lower Your Mortgage Interest Points
My second recommendation would be to look at POINTS you would pay on a mortgage refinance. Usually you can pay a little bit more upfront to get a lower rate. But the thing you want to be careful of is to make sure you’ll be living in the house long enough so it makes sense to pay those points up front and you get the interest benefit as you pay off the mortgage in the future.
How Does Retirement Affect Your Mortgage?
The third recommendation I would add for you is to think about your OTHER GOALS. So in your forties or fifties for example, you’ll think about retiring at 65. Just remember that if you take out a 30 year mortgage, That mortgage won’t be paid off until you are into your retirement.
So if you do that, just make sure you have a plan to pay off that mortgage more aggressively so that you are not carrying and having to pay off that mortgage when you retire.
When Should I Refinance My Mortgage?
And the last thing I’d mention and probably the biggest question I get is WHEN SHOULD I REFINANCE? Our basic recommendation is to look at the current rate you are getting now compared to what you could get.
And when you look at those options relative to what you have today, just keep in mind, look at the total interest you would pay over the remainder of the mortgage and compare to what you are paying now. And then just make a decision based on all these factors to take out the best mortgage for you and your family.
So if you have any questions about your current mortgage, feel free to reach out to us. We’ll run various scenarios for you so that you are in the best mortgage you and your family can be in.
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Rob has over 20 years of experience in the financial services industry. Prior to joining Financial Design Studio in Deer Park, he spent nearly 20 years as an investment analyst serving large institutional clients, such as pension funds and endowments. He had also started his own financial planning firm in Barrington which was eventually merged into FDS.