Are you contemplating how often to refinance your primary home mortgage? As someone who has refinanced numerous times since 2003, I can offer some insights. Essentially, you should consider refinancing whenever it can save you money.
Since the global pandemic began, mortgage rates have plummeted, largely due to the Federal Reserve slashing the Fed Funds rate to near zero in early 2020 and planning to keep it there for the foreseeable future. Despite recent rate increases due to inflation, there are still opportunities to save. For instance, I managed to secure a 7/1 ARM jumbo mortgage at just 2.25% in 2020. It’s crucial to continuously shop around for the best rates.
Over the past decade, thanks to significant monetary easing by the Federal Reserve, anyone with a mortgage should have considered refinancing at least a couple of times. For example, I refinanced my mortgage four times in seven years and will continue to do so as long as it benefits me financially. My refinances have ranged from reducing my rate from 3.625% to 3.125% without any fees, to later securing a rate as low as 2.625%.
The process can seem daunting, especially for those new to it. Many of my friends have hesitated despite the potential to significantly reduce their interest rates from something like 5.5% down to under 3%. This hesitation often stems from uncertainty about the process or misperceptions about the costs involved.
One of my friends recently refinanced through Credible, an online platform. Unlike traditional banks, online companies often have lower overhead and can offer competitive rates through their extensive networks. He was able to match my low rate of 2.125% and complete the entire process online, which he found convenient and efficient.
However, it’s worth noting that the refinancing process can be lengthy and frustrating. For instance, while my refinance took about 100 days, my friend’s online refinance through Credible closed in just 58 days. This experience has opened my eyes to the viability and advantages of online refinancing options.
If you haven’t checked mortgage rates recently, it’s worth doing so, as you might find significantly lower rates than your current one. This approach is similar to price checking on Amazon before making a purchase—you check online to see if you can get a better deal elsewhere.
In conclusion, consider refinancing your mortgage as often as it provides financial benefit. A good rule of thumb is if you can break even on the refinancing costs within 18 months or less, it’s likely a worthwhile endeavor. For those looking to invest in real estate without managing physical properties, exploring real estate crowdsourcing platforms like Fundrise could also be beneficial. They offer a way to diversify your investments and potentially achieve higher returns compared to traditional real estate venues.
