One good reason to refinance at a higher interest rate (Podcast)

Abstract

According to mortgage expert Shivani Peterson, there's at least one good reason to refinance these days - even with the higher rates we're seeing. Listen to Shivani on The Mortgage Reports Podcast! Why refinancing might still be smart "A lot of you might be thinking you wouldn't refinance if your interest rate was going to go up... 'That's a no-brainer. You refinance to drop your interest rate only. It makes no sense if your interest rate's going up,'" Peterson said on the episode. For one, most loans and other financial products, particularly credit cards, have much higher interest rates than mortgages. According to the St. Louis Federal Reserve Bank, the average credit card rate is nearly 15%. Mortgage loans - even at their higher levels today - are under 6%. When you borrow from your home equity at a low rate, and use those funds to pay off expensive debts, you can seriously reduce the amount of money you're paying on interest each month. "Well, if you look at your monthly payments that are being eliminated by paying off those debts... and compare that to how much your mortgage is going to go up, you might be in a position where your cash flow is actually increasing." Those savings can alleviate financial pressure or allow you to invest more. "You're not spending anything more each month, but you'll pay off your mortgage faster and you eliminated those other debts and don't have those payments anymore," Peterson said. So if you're considering a cash-out refinance in today's market, talk with a qualified mortgage professional first.