Is it time to refinance your mortgage?

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Q. I know interest rates will go up soon. My 30-year mortgage has 24 years left and the interest rate is 4 percent. Should I consider refinancing if I can get 3.5 percent?
— Homeowner

A. Cheaper mortgage rates are always attractive, but the cost to refinance must be considered.

These are called “closing costs.”

Closing costs might include appraisal fees, title search fees, title insurance for the lender, recording fees, settlement agent fees and more, said Roy Williams, president and founder of Prestige Wealth Management in Flemington and Millburn.

In total, the cost can range from a few hundred dollars to thousands of dollars.

Williams said you should calculate how long it will take to recoup your closing costs.

“For example, if your costs are $2,500 but you reduce your monthly payment by $200, you will recover your costs in about 12-and-a-half months,” he said. “If you plan to stay in your home for at least another year, then refinancing might make sense.”

Another reason to refinance is to save on private mortgage insurance, or PMI.

If when you purchased your home, you put down less than 20 percent, you have to pay PMI as part of your monthly payment, Williams said.

“If your house has now appreciated in value or you have made sufficient mortgage payments so that the loan amount is less than 80 percent of the value of the home, you do not have to pay PMI, and this savings might make it worth it to refinance,” he said.

Good luck!

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This post was first published in March 2017. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.