{"id":6463,"date":"2025-09-18T08:23:08","date_gmt":"2025-09-18T13:23:08","guid":{"rendered":"https:\/\/stpaulfcu.org\/?post_type=education&p=6463"},"modified":"2025-09-18T08:23:09","modified_gmt":"2025-09-18T13:23:09","slug":"when-to-refinance-your-home","status":"publish","type":"education","link":"https:\/\/stpaulfcu.org\/education\/when-to-refinance-your-home\/","title":{"rendered":"When to Refinance Your Home"},"content":{"rendered":"\n

If you\u2019re like other homeowners, questions about when to refinance your home have popped up a time or two. Of course, you\u2019d love a lower monthly mortgage payment but there are a lot of factors to consider be deciding to go forward with a refinance.<\/p>\n\n\n\n

Why People Refinance<\/h2>\n\n\n\n

Here are some of the better reasons why a homeowner may decide to refinance\u2026<\/p>\n\n\n\n

To Take Advantage of Lower Interest Rates<\/h3>\n\n\n\n

Many lenders claim even 1% savings on interest rates<\/a> should be reason enough to refinance. Reducing your interest rate can help you build more equity in your home sooner while decreasing the size of your monthly payment, which saves you lots of money.<\/p>\n\n\n\n

To Shorten the Life of Their Loan<\/h3>\n\n\n\n

If your current mortgage rate has a really high interest rate, refinancing can help you pay off your home faster without changing your monthly payment much.<\/p>\n\n\n\n

To Convert Between Adjustable-Rate and Fixed-Rate Mortgages<\/h3>\n\n\n\n

Over time, rates on Adjustable Rate Mortgages (ARMs) can increase until they top the going rate for fixed-rate mortgages. When this happens, switching to a fixed-rate mortgage is a good idea.<\/p>\n\n\n\n

When Refinancing is a Bad Idea<\/h2>\n\n\n\n

Yes, a home refinance can save you money. However, there are circumstances where it can cost you more in the long run\u2026<\/p>\n\n\n\n

When You Need Money to Pull Yourself Out of Debt<\/h3>\n\n\n\n

Most people who refinance for this reason end up spending all the money they save, and then some. Bad idea.<\/p>\n\n\n\n

When a Refinance Greatly Lengthens the Loan’s Terms<\/h3>\n\n\n\n

\u2013 If you only have 10 years left on your mortgage and you want to refinance to stretch out those payments over 30 years, you won\u2019t come out ahead. Any money you save on lower payments will be lost in the cost of the refinance and the extra 20 years of interest you\u2019ll be paying on your mortgage. Again, bad idea.<\/p>\n\n\n\n

When You Don’t Plan on Living in Your Home for Much Longer<\/h3>\n\n\n\n

The money you save each month might not even come close to the prohibitive price you paid for your refinance. Yup, another bad idea.<\/p>\n\n\n\n

What is a Cash-Out Refinance?<\/h2>\n\n\n\n

Some homeowners refinance to tap into their home\u2019s equity. To do this, they\u2019ll need to refinance with a bigger loan and stay within the loan-to-value threshold of their loan program.<\/p>\n\n\n\n

Only choose this option if you can afford the loan terms, and preferably, will use that money to increase your equity.<\/p>\n\n\n\n

How Much will it Cost?<\/h2>\n\n\n\n

It\u2019s important to know home refinances aren\u2019t cheap. You\u2019ll need to pay broker fees, closing costs and more. A typical refinance will cost anywhere between 3-6% of the loan\u2019s principal.<\/p>\n\n\n\n

Here\u2019s how to determine if a refinance will save you money: Procure a loan estimate from several lenders to get your projected interest rate and loan price. Divide this price by the amount you\u2019ll save each month with your new rate. This is the number of months it will take for you to break even on the new loan.<\/p>\n\n\n\n

If you don\u2019t plan on staying in your home for that long, or you can\u2019t afford to wait until then to recoup your losses, refinancing may not be a good idea.<\/p>\n\n\n\n

Still want to look further into the possibility of refinancing your home? Reach out to us at St. Paul Federal Credit Union<\/a>. If right now isn\u2019t the best time to refinance your home, we\u2019ll be here when it makes dollars and sense!<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

If you\u2019re like other homeowners, questions about when to refinance your home have popped up a time or two. Of course, you\u2019d love a lower monthly mortgage payment but there are a lot of factors to consider be deciding to go forward with a refinance. Why People Refinance Here are some of the better reasons […]<\/p>\n","protected":false},"featured_media":6464,"template":"","education-category":[194],"class_list":["post-6463","education","type-education","status-publish","has-post-thumbnail","hentry","education-category-tips-resources"],"yoast_head":"\nWhen to Refinance Your Home - St. Paul Federal Credit Union<\/title>\n<meta name=\"description\" content=\"You may have questions about when to refinance your home. 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