Should you refinance now? Depends!


In the past few weeks, we've gotten quite a few emails from homeowners wondering if they should take advantage of these historically low interest rates and refinance. A general rule of thumb is that you should refinance if you can lock into a rate approximately 2% below your current rate. Otherwise, the costs and hassles of refinancing outweigh the benefits.

When you refinance, you have to pay many of the same costs you paid when you purchased your home in the first place: attorney's fees, appraisal fees, application fees, processing fees (whatever that is), etc. But many of these costs scale well -- the costs refinancing a $3 million loan may not be substantially higher than refinancing a $50 thousand loan. So a big part of whether refinancing makes sense is the size of your loan -- if your loan is small, you will need a big difference between your current interest rate and the new one.

Use this handy-dandy refinancing calculator from BankRate to get an idea about whether refinancing makes sense for you.

Originally published