With the Federal Reserve cutting interest rates by a full percentage point — which is the largest in Fed history — there is no better time than now to refinance your debt, such as mortgages, student loans, and credit card debt. As Mike Hennessy, CFA, CFP®, told Fox Business, "We are shouting from the mountaintops to refinance your home mortgage."
“While interest rates are volatile and refinance volumes have surged, if you have a four percent or higher mortgage, there is no better time than now to lock in a lower rate,” said Hennessy, founder and CEO of financial advisory firm Harbor Crest Wealth Advisors in Fort Lauderdale, Florida. "If you’re considering refinancing, it’s important to shop around a few of the major lenders to make sure you’re getting an attractive deal.”
But don’t get caught up in the interest rate and overlook the costs that may be associated with some loans. No matter what kind of debt you want to refinance, many lenders will charge fees, such as closing costs, balance transfer fees, and loan origination fees. These costs could eliminate any savings you might realize from the lower interest.
As one financial advisor cautioned, refinancing your mortgage is not a solution if your income goes away because of the Coronavirus: "No bank will loan you money if you have no income. So, it only remains a tool if you have a good stable income."
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