Today on Money Matters Finance expert Barry Bigelow dives into how homeowners should go about refinancing their home.
With interest rates constantly shifting, many homeowners are left wondering: Is now the right time to refinance? On this week’s Money Matters Monday, financial expert Barry Bigelow joined the show to shed light on this often confusing topic.
“The old rule used to be if the rate was 2% lower than your current rate, then you would refinance,” Bigelow explained. “It’s not the same now. It’s more of a cost-benefit analysis.”
According to Bigelow, today’s refinancing decisions aren’t just about interest rates. Many banks now offer no-closing-cost loans, and homeowners are choosing to refinance for reasons beyond savings, like shortening their mortgage terms or switching from a variable to a fixed rate.
One of the most common motivations? “A lot of people will refinance from a 30-year mortgage down to a 15-year mortgage solely just to cut the time down for how long they’re going to be making payments.”
But it’s not all smooth sailing, there are pitfalls to avoid.
“The biggest mistake is going from a 30-year mortgage, paying for three years, and then refinancing to another 30-year mortgage,” he cautioned. “Extending those payments further into your career can come back to haunt you, especially when you’re nearing retirement.”
So before you refinance, make sure to weigh the costs, review the terms, and think long-term. Catch more tips next week as the series shifts focus to back-to-school finances!