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Local financial expert explains when it’s time to refinance your mortgage

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KANSAS CITY, Mo. -- Home mortgage rates have come up about one-half of one percent in recent months, rising to about 4% from 3.5% for 30-year loans. Some people are asking, “Should I refinance my mortgage now?” The answer is probably yes, if you have an older loan, especially if you have maintained a great credit score. Financial expert Kathy Stepp breaks down what you need to know about refinancing your mortgage in the video above.

 

Is it time to refinance your mortgage?

Although 30-year mortgage rates have recently returned to about 4%, they are still relatively low. We may not return to mortgage rates much lower than that for a very long time. Rates are even lower at 3.25%, for 15-year mortgages. This rate is also about a half point higher than the recent low.

The cost to refinance includes an appraisal, fees, title insurance, points, etc. Different lenders charge different amounts for these items, so it is important to shop around. Start with your current lender, as that may be your cheapest option. After you know the cost, determine how long it will take to recoup your costs through the savings you will experience each month in your payment. If the payback period is reasonable and you expect to continue to live in your house for at least that long, then you are a good candidate for refinancing.

You may get a better interest rate if you agree to put some of your own money down first, making your loan amount lower. Conversely, expect a higher interest rate if you expect to take cash out upon refinancing.