SHOULD YOU REFINANCE?
The main costs associated with refinancing are one’s title insurance, appraisal fee and the credit report (since you need to qualify all over again for the new interest rate), which all might add up to about 1.5% of the loan amount. Whether you should refinance depends on whether you can save enough on the interest rate to make up for that cost, or break even, in one or two years, lenders advise. If you can answer yes to these questions, it might be time to talk to your lender:
■ Is your current rate at least 0.75% higher than the current interest rate of 3.62%? (You can check up-to-date rates through the Federal Reserve Bank of St. Louis website.)
■ Are you staying in this home for at least two more years?
■ Have you been dreaming of a home improvement project that would cost tens of thousands, or do you have large college payments coming down the line?