I know how confusing it can be to compare mortgage interest rates, trying to save money. That's because the lowest mortgage rate is not always your best deal. My daughter called last night to ask for refinance advice. She could drop her interest rate over 1% but the cost to refinance was more than $15,000.
Another lender suggested she refinance with no closing costs. Her interest rate wouldn't come down as much but there would be no cost to refinance.
My daughter asked...
Mom, please help me compare rates. Am I saving money by spending $15,000 to get a lower rate? Or is a refinance with no closing costs a better deal even though the rate is a little higher? How do I choose the best deal for my mortgage?
Hi, my name is Kate and I'm a retired mortgage broker. For over 20 years, I helped thousands of people refinance. I taught my clients how to compare rates and how to get the best deal for their mortgage. But some people did not start out knowing why they wanted to refinance and knowing why makes all the difference.
Before you compare rates, your first step is deciding why you want to refinance. To save money means different things to different people. What does saving money mean to you?
For some, saving money means a lower monthly payment. For others, it's a refinance with no closing costs. Some people are content with a higher payment in order to get cash back from their refinance.
Choose which of the following is most important to you!
Your first step is to decide what saving money means to you. Then it's easy to determine the best deal for your mortgage because you know what want.
And by the way, my daughter decided to NOT refinance. She plans to sell the home in 2 or 3 more years. So, the best deal for her was to keep the mortgage she has right now. Saving money, to her, turned out to be not refinancing at all!
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