Another thing worth checking is your current loan term vs. the new one. If you're already 10 years into a 30-year mortgage, refinancing back into another 30-year might lower monthly payments, but you'll pay way more interest overall...just something to keep in mind.
Good points, but refinancing back into a 30-year isn't always a bad move. A few things to consider:
- If your current interest rate is significantly higher than what's available now, the savings could outweigh the extra years of interest—especially if you invest or save the monthly difference.
- You don't necessarily have to stick with a 30-year term. Refinancing into a 15- or 20-year loan might still lower your rate and total interest paid, without resetting the clock completely.
- Also, think about your long-term plans. If you're planning to sell or move within the next 5-7 years, the overall interest cost might not matter as much as immediate cash flow.
I had a client recently who refinanced after 8 years into another 30-year loan. On paper, it looked like they'd pay more interest overall, but they used the monthly savings to pay off high-interest credit card debt and boost retirement contributions. In their case, it made sense financially.
Just saying...it's not always black and white.
Good points overall, but a couple things I'd add from experience:
- Refinancing to a lower rate is great, but watch out for those sneaky closing costs. Sometimes banks love to hide fees like my dog hides socks...you don't notice until it's too late.
- If you're disciplined enough to invest the monthly savings, awesome. But let's be real—most of us end up spending it on pizza and Amazon Prime orders instead.
- And yeah, shorter terms can be smart. But honestly, if you're planning to move soon-ish, who cares about shaving off 5 years? Cash flow now can be king.
Just my two cents...well, maybe three.
Solid advice—especially the bit about banks hiding fees. Reminds me of when I refinanced a couple years ago. Thought I was getting a sweet deal, but once I got to closing, suddenly there was this random "processing fee" that felt like it came outta nowhere. Felt kinda bait-and-switchy, honestly.
As for investing the savings...yeah, easier said than done. Told myself I'd put the extra cash into index funds every month. Fast forward six months, and my portfolio was mostly takeout sushi and impulse buys from Home Depot.
But one thing I'd slightly push back on is the shorter term comment. Even if you're planning to move relatively soon, sometimes building equity faster can give you more flexibility when you sell. Had a buddy who shortened his term, and when he sold unexpectedly early (job relocation), he ended up with enough equity to comfortably cover moving costs and then some. Just something else to chew on...
Yeah, those hidden fees can be sneaky—I've seen plenty of clients blindsided at closing. Always worth double-checking the fine print (boring, I know). On the shorter term thing, you're right it can pay off, but it's not a one-size-fits-all deal. I've seen folks stretch themselves thin trying to build equity faster, only to regret it when life throws a curveball. Definitely something to weigh carefully...and maybe budget a little less sushi next time? 😉
