When Should You Refinance Your Connecticut Mortgage?

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Mortgage refinancing in CT can be a great way to save on monthly mortgage payments when interest rates drop. However, it only makes sense to refinance if the associated fees and costs work out to less than the potential savings you’ll see over the time you’re paying the refinanced mortgage.

For example, if you intend to sell the home within 10 years or so, how much money will you be able to save over 10 years after refinancing in CT?  If the closing costs and fees for the new mortgage end up costing $10,000, and you’re saving $100 per month on the mortgage payment with your new interest rate, you’ll end up saving $12,000 on the refinance over 10 years of payments.  

In other words, you’ll have paid $10,000 and saved $12,000, for net savings of $2,000.  If there’s a chance you’ll want to sell the home any sooner, this may not be enough of a margin to make the refinance attractive. The last thing you want is to sell the home having lost money on the Connecticut mortgage refinance.

With Low 2021 Connecticut Mortgage Rates, the Time is Now

For individuals with good credit scores, Connecticut refinancing rates are currently hovering around 2.6% for a 30-year fixed-rate mortgage, and as low as 2.3% for 15-year fixed-rate mortgages (as of February 12, 2020). These historically low rates could make 2021 a fantastic year to refinance your home. 

Home values in CT have also risen significantly over the past year—especially in high-appreciating areas like New Haven, Cornwall, and Greenwich—which means many homeowners will have gained a large percentage of equity in the home as a result of fluctuations in the housing market since the original mortgage.  The more equity you have, the more likely you’ll be to get approval on a Connecticut mortgage refinance.

Change From ARM to Fixed-Rate Connecticut Mortgage

This is also an excellent time to lock in low CT refinance rates with a fixed-rate Connecticut mortgage refinance.  If your existing loan is an adjustable-rate mortgage (ARM), the interest rate will continue to rise and fall over time, but a new fixed-rate mortgage will lock in today’s generationally low CT mortgage rates for the life of the loan.

You could also consider changing from a 30-year Connecticut mortgage to a 15-year plan, if you would prefer to be free of your mortgage in a shorter period of time.  It’s likely that your payments would increase after the refinance, but not nearly as much as they would have at the higher interest rates prior to the pandemic.  This could greatly reduce both the total interest you’ll have to pay over the life of the loan and limit the increase you’ll see in your mortgage payments in the meantime. For homeowners that can afford the upfront costs, switching to a 15-year plan could ultimately save a fortune.

It’s always best to consult with a qualified and experienced Connecticut mortgage lender before kicking off your refinance process. An expert lender can help you understand your options and the pros and cons of a refinancing in CT this year. Poli Mortgage is here to help! Get pre-approved or apply online today.

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