Are you wondering how often should you refinance your primary home mortgage? You've come to the right place because I've refinanced dozens of mortgages since buying my first property in 2003. The shorter answer is you should refinance your mortgages as many times as possible to save money!
Mortgage rates collapsed during the global pandemic. The Federal Reserve cut its Fed Funds rate to 0% – 0.125% in the first half of 2020. They then stated the play to keep the Fed Funds rate at 0% – 0.125% for years to come. However, with elevated inflation, mortgage rates have shot up in 2022+.
You should check the latest mortgage rates online. I got a 7/1 ARM jumbo mortgage for only 2.25% in 2020! The key is to keep shopping around for real mortgage rate quotes.
Refinance A Property As Many Times As Possible
I've refinanced my primary mortgage four times in seven years and I won't stop as long as rates keep going lower. The Federal Reserve has conducted so much monetary easing over the past 10 years that everybody with a mortgage should have refinanced at least a couple times!
In the fall of 2012, I refinanced my jumbo 5/1 ARM at 3.625% down to 3.125% with no fees or cash outlay. It took about 70 days, but it was well worth it because I only had two years left before my fixed rate expired. My interest payments went down by a several hundred bucks.
I thought I was set for another five years until I checked again at the end of January, 2012 when the 10-year yield dropped to 1.85% from 2%. To my surprise, I discovered I could refinance AGAIN just 5 months later. This time, at a rate of only 2.625% for 5 years! Banks began lending again, sacrificing margins for market share.
Although my mortgage refinance took around 100 days to complete, I'm now so thankful that it's done because I no longer have a W2 paycheck, making it brutally difficult to ever refinance or get a mortgage again! By taking action, I'm able to save around $20,000 in interest expense over the next five years.
In 2016, I refinanced again after buying a new property in Golden Gate Heights in San Francisco in 2014.
Biggest Deterrents To Refinancing A Mortgage
The entire mortgage refinance process seems daunting for the inexperienced. I have many friends who are eligible to refinance. But they are happy to pay their 5.5% 30-year fixed rate mortgage they took out five years ago because they don't know where to start!
They are crazy for leaving so much money on the table because 30-year fixed rate conforming mortgages are now below 3%! By refinancing down to 2.87% from 5.5%, they would save $10,000+ a year in interest expense on a $500,000 mortgage.
Checking The Latest Mortgage Rates Online
I finally got one of my friends to join me to refinance their mortgage this past Spring. However, instead of going with my guy at Citibank, he went with Credible.
At the time, I had no idea what Credible was because I had always focused on refinancing with the traditional banks in Bank of America and Citibank. I thought Credible was just a finance software company, and I wanted to see the eyes of my mortgage officer and shake his hand so he wouldn't screw me.
Because Credible is an online company, they do not have the overhead costs that the traditional bricks and mortar banks have. As a result, they are able to pass along some of their savings to their clients and find the best mortgage rates for you given their massive network.
My friend was able to match my rate of 2.125%, get a small credit, and do everything online. He felt comfortable with the process so I wished him good luck.
A Long Refinance Process Could Have Been Easier
On the 58th day of my 100 day mortgage refinance saga, my friend informed me his loan had closed!
His mortgage refinance with a Credible loan closed a full month before mine did and I was getting annoyed as hell because I was going bonkers waiting so long for my guys to get done.
Of course there was this whole PG&E utility bill fiasco that delayed my closing by another 10 days in the end as well.
Pretty soon, several other colleagues and friends started mentioning other lenders with rates even lower than what I was getting.
I always thought I was special. I thought I was getting the lowest rate with Citibank since I have a 11-year relationship with them. I've also got several hundreds thousands in savings with them as well.
Credible not only matched the rates I received, they referred a lender that closed in a shorter time period. Of course each case will be different. However, based on what I've seen, the bricks and mortars banks are in for a lot of competition.
If you haven't checked the latest mortgage rates in the past 6 months, chck now. I'm pretty sure rates will be much lower than what you've got now.
Mortgage Rates Keep Going Down
The hesitancy with dealing with online companies is fading and that's great for consumers. For example, I have never met my USAA bank representative in person. Yet, I've opened up three CDs with USAA because their rates at the time were so much higher than everybody else.
For future mortgage refinances, I'm going to always at least check with online companies before making a move. It's the same concept as checking out a product's price on Amazon for the lowest rate. You then check out the product in real life. Finally, you then going back online to buy the product!
I hope you are no longer wondering how often should you refinance your primary home mortgage. The answer really is as often as you can to save money.
A great breakeven point for deciding whether to refinance is 18 months or less. In other words, in 18 months or less, the savings you get from refinancing your mortgage will start being greater than the cost of refinancing a mortgage.
You may also want to go my favorite “no-cost refinancing” route so you can have immediate savings. You'll end up paying a higher mortgage rate, but you are guaranteed to save immediately.
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