Want to Refinance Your Mortgage? Here’s What You NEED to Know, Ep #153

I often get asked, “Should I pay off my house early?” and “Should I refinance my mortgage?” So in this episode of Best in Wealth, I answer those two questions. But to answer those questions, there are a few other questions YOU have to consider. What are they? How do they influence your decision? Which route should you take? Listen to find out![bctt tweet="When Should You Refinance Your Mortgage? In this episode of Best in Wealth, I share my thoughts on WHEN and HOW to refinance. Check it out! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement " username=""]Outline of This Episode[1:06] Should I pay off my house early?[3:57] How to determine if you should refinance[8:10] Which loan option is the best choice[9:27] What are your needs or goals?[15:10] The obstacles faced with a 15-year mortgage[17:12] The two refinancing strategies to useWhat does paying off your mortgage early really mean?I like the idea of paying off your home and reaching financial freedom—but what does it actually mean? Interest rates are as low as they've ever been. If you’ve got a great credit score and 20% down, you’re going to get a low interest rate. Possibly under 3%, depending on where you live.But if you took that same money and invested it, you could reasonably expect a 10% annual return (based on the history of the S&P 500 index). So you might say that your money is better off in the market from a net worth standpoint.But others may prefer the peace of mind of paying off their home. If you retire and your house is paid off, it helps your retirement projections. It feels good and it means freedom. Do you want freedom? Or do you want a higher rate of return on your money?How to determine if you should refinanceIf you’re considering refinancing, there are some questions you need to ask yourself first:Do you plan to remain in your home for a few years? If the answer is no, the cost may exceed any benefit. If you save $50 a month in interest by refinancing, but you plan to sell in 2 years, 50x24 months is a savings of only $1,200. If it costs you $2,000 to refinance, you probably shouldn't refinance—you’ll be losing $800 in that deal.Are you nearing a milestone event? Retirement? The end of an adjustable-rate mortgage (ARM) or balloon term? If the answer is yes, consider refinancing before your options become limited by income restraints. At that point, you might not qualify to refinance.Is your loan to value ratio greater than 80%? If the answer is yes, you don't have 20% down on your home and will have a hard time refinancing. You’ll still be subject to (private mortgage insurance) PMI.Has your credit score recently improved? You may be in the category of wanting to refinance. Are you locked into a fixed rate? Do you expect the rates to go up or down from here? They’ll probably go up from here. If you’re in an ARM, it might be time to lock in a fixed-rate now.What’s the interest rate environment? The interest rates have gone down in the last few months. After answering all of these questions, if you’re still in the category of, “Yes, I think I want to refinance.” then you need to look at what loan is the best for you.[bctt tweet="How do you determine if you should refinance? What are your options? Listen to this episode of Best in Wealth to find out! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""]Which loan option is the best choice?If your current interest rate is 3.5%, how much lower does it have to be to be worth it? If you can lower your rate even half a percent, then you are winning. But you need to seek loan terms that best match...