But let's take a closer look at the potential savings through a refinance in your state.

## What refinancing would save you in Kentucky

Let's suppose that you bought a \$250,000 home in Kentucky during April 2018.

You made a 20% down payment of \$50,000 and got a \$200,000, 30-year fixed-rate mortgage at 4.58%, which was a typical rate at the time, says the giant mortgage company Freddie Mac.

A mortgage calculator shows that your current monthly payment under that scenario is about \$1,022.

Today, the average 30-year mortgage rate in Kentucky is 4.05%, according to LendingTree's Value Penguin site. At that rate, a 30-year fixed-rate mortgage for \$200,000 has a monthly payment of just \$960.60.

You'd be saving \$61.40 per month or \$736.80 per year. Does that seem appealing?

Let's say you live in a pricier area and bought a home about two years ago for \$550,000 and put 20% down, or \$110,000. Your current monthly payment for a \$440,000, 30-year fixed-rate mortgage at 4.58% is \$2,250.

A similar 30-year mortgage at 4.05% — today's average rate in Kentucky — would give you a monthly payment of \$2,113.33. That's a savings of \$136.67 a month or \$1,640.04 per year.

Consider your potential savings over the life of the loan.

## But, should you refinance?

Refinancing can be a very wise financial move, but a few questions will help determine whether it really makes sense for you:

• What will it cost you? Swapping out your old mortgage for a brand-new one means you'll have to deal with closing costs all over again — and those fees and taxes average \$5,749 nationwide, says the real estate data firm ClosingCorp.
• How long do you think you'll be in the home? It could take at least a couple of years for you to make back your closing costs with the savings from your refi. If you think it's possible you might move within a year or two, then refinancing probably isn't worth it.
• Will your existing mortgage allow you to say goodbye? Some mortgages come with prepayment penalties that can cost you thousands of dollars if you pay off the loan early, typically within the first three or five years. You'll want to check with your current lender.
• Has your credit gotten worse? If you've been late with your bills recently or have otherwise fumbled with your credit, refinancing is a moot point because you're not likely to score one of today's ultra-low mortgage rates. Check your credit score — it's easy to do that for free — and if you score needs improvement, get to work.

What kind of answers did you come up with? If you've come away convinced that a refinance is the right move, then start by taking a look at today's best mortgage rates where you live.

## About the Author

### Doug Whiteman

#### Editor-in-Chief

Doug Whiteman is the editor-in-chief of MoneyWise. He has been quoted by The Wall Street Journal, USA Today and CNBC.com and has been interviewed on Fox Business, CBS Radio and the syndicated TV show "First Business."