As with any refinance, there are multiple factors to calculate and various ways to look at the math to see if it all makes sense. The interest rate is usually the first factor that is evaluated, so let’s start there.
As a general rule of thumb, you will typically want to investigate a refinance if current market interest rates are lower than your existing mortgage interest rate. So what are the numbers?
If your current primary residence has a loan greater than 4.25% then it may be a good time to investigate a refinance.
Investment properties have a few additional considerations, including your current loan to value. If your mortgage amount is less than 75% of the value of your home, and your interest rate is higher than 5%, you may want to investigate a possible refinance.
In other words, if your home is worth $230,000 and your loan payoff is less than $173,000, while your interest rate is higher than 5%, you may have a real shot at lowering your interest rate and increasing your monthly cash flows.
How do you know if you should investigate a refinance?