• linkedin
  • Increase Font
  • Sharebar

    When to know if you need to refinance a mortgage

    In some cases, refinancing a mortgage is done to lower payments by extending the time that the loan will exist.

    For example, you might have a 15-year loan that is a couple of years old and are having trouble with the amount of the payments.  You could refinance (and hopefully with a lower interest rate) to a 30-year loan and expect your payments to drop significantly.  However, you will be making payments for much longer.

    Related: When a simple IRA make sense for your practice

    A more common motivation to refinance a mortgage is to reduce the rate of interest paid on the loan.

    Refinancing for this reason was common until recently, as mortgage rates ranged from only 2% to 4% since around 2009. 

    Dropping interest payments over a long mortgage can save tens of thousands of dollars.

    However, refinancing is not free.  Most of the time, this process takes time, paperwork and $2,000 to $5,0000 in various fees. There are certain instances in which refinancing a mortgage may not make sense. One time is during the last five years or so of a typical 15- to 30-year mortgage.

    Next: When interest payments change is very small

    Steven Podnos MD, CFP
    Steven Podnos, MD, CFP, is the principal of Wealth Care, LLC in Merritt Island, Florida.

    0 Comments

    You must be signed in to leave a comment. Registering is fast and free!

    All comments must follow the ModernMedicine Network community rules and terms of use, and will be moderated. ModernMedicine reserves the right to use the comments we receive, in whole or in part,in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

    • No comments available

    Latest Tweets Follow

    Poll