Editor's note: This story previously referred to "private mortgage interest." The correct term is "private mortgage insurance."
When interest rates are low, homeowners may look to save money by refinancing, which means getting a new mortgage with a better term or interest rate to lower payments. Mortgage rates have steadily declined since November 2018, according to weekly data from Freddie Mac, also known as the Federal Home Loan Mortgage Corp.
Matt Frankel, a certified financial planner and mortgage analyst at The Ascent by Motley Fool—a general personal finance advice resource—shared advantages and disadvantages of the refinancing process.
What to consider
- Is the current market rate at least 1% lower than your existing mortgage rate?
- Are you planning to stay in the same home for at least five more years?
- Always consult multiple lenders to find the best mortgage rate. Start with your current lender.
- Multiple inquiries from mortgage lenders affect an individual’s credit score no more than a single inquiry, Frankel said
