Dear Lifehacker,Interest rates are so low these days that Im thinking of refinancing my home mortgage.
However, Im worried about closing costs and other potential disadvantages of refinancing.
How can I decide whether refinancing now is a good idea or not?
Heres a three-step plan for making the decision.
Youll qualify for the lowest rates if you have an excellent credit score (740 to 850).
(Mortgage program guidelines vary, however.
The value of your home now:The more equity in your home, the better.
Then find your LTV withthis calculator.
With the information above, you should have a feel for how easy it will be to refinance.
Having a big emergency fund or other assetscould help.
This will show you how many months it will take for you to break even.
This is a big factor if you dont want to have a mortgage obligation when youre in retirement.
it’s possible for you to look into 15-year or 20-year mortgages instead of a fixed 30-year one.
Youll find more advanced calculators to see if refinancing makes sense for different scenarios atMortgage Professor.
Good luck,Lifehacker
Photos byNewtown grafitti,Timothy R. Nichols(Shutterstock),Wells Fargo.
