Tip 20: Reduce your house payments with a mortgage re-fi
If you own a home and plan to stay for awhile, refinancing your mortgage- known as a "re-fi"- may be a good way to save money. Refinancing can allow you to get a lower interest rate and save money through lower mortgage payments over time. There are closing costs to get a new mortgage, so refinancing only saves money if the interest rate is lower and you will be in your house for a few years. Here is a link to a mortgage refinance calculator that I made so you can see if a re-fi would save you money.
Part of the challenge of knowing whether to refinance is that the future is hard to predict. It is hard to know whether you will stay in the same house for a long time. If you refinance and then move within a couple years, you will likely lose money on the refinance due to the closing costs being more than you will save on lower payments due to a better interest rate. Interest rates change all the time, so you could refinance at a bad time only to have rates drop later.
House payments are one of the biggest bills that most people face. See if reducing your bill for housing every month by refinancing makes sense for you.
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