If you’re thinking about refinancing your home, it can save many thousands of dollars over the life of a mortgage; however, home refinancing is not without peril. You have to be willing to make a sober assessment of your financial situation and conduct your own research before making the decision to refinance (refi) your home. There are potential pitfalls to a refi if you aren’t careful. An old and enduring rule about refinancing says that it only makes sense to refi if you can shave two percentage points off your current interest rate. A lower interest rate is certainly helpful, but your prevailing concern should be how long it takes to break even on a refi. For instance, when closing on a home, there are usually points paid on a refinance. If you don’t plan to stay in the home long enough to realize the savings, a refinance does not make financial sense for you. Next, make sure the new mortgage will actually save you money. For example, a mortgage with a variable interest rate for 15 years instead of 30 years might sound attractive initially. However, when interest rates go up, so will your monthly payment. Mortgages for shorter periods of time can save you a ton of money over time, but make sure that you can comfortably afford the higher monthly payments. It’s a good idea to shop around with different lenders to see which offer the most favorable terms. While it may be more convenient to refinance through the lender that issued the mortgage since they have all the documentation, shopping around for the best rates is smart money management. Most of all don’t be afraid to ask tough questions when refinancing your home. Driving a hard bargain might inspire the loan officer to shave a few more points off the interest rate in order to make the deal! If you are looking to buy or sell Louisville Real Estate, Louisville Properties can help.  Please contact us and 502-744-9504 today.