Let's take a look at the potential savings through a refinance in your state.

What refinancing would save you in Wisconsin

Let's say you bought a \$250,000 home in Wisconsin during October 2018.

You made a 20% down payment — that's \$50,000, for those of you with math anxiety — so you got a 30-year fixed-rate mortgage for \$200,000 at 4.90%, 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 \$1,061.45.

Today, the average 30-year mortgage rate in Wisconsin is 3.86%, 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 \$938.76.

You'd be saving \$122.69 per month or \$1,472.29 per year. Not bad, right?

Let's say you live in a more expensive area and bought a home about a year 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 4.9% is \$2,335.20.

A similar 30-year mortgage at 3.86% — today's average rate in Wisconsin — would give you a monthly payment of \$2,065.27. That's a savings of \$269.93 a month or \$3,239.16 per year.

Imagine your potential savings over the life of the loan.

But, should you refinance?

Freddie Mac has said that homeowners who refinanced earlier this year are saving an average \$140 a month or \$1,700 per year.

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

• What's it going to cost you? Trading in your old mortgage for a brand-new one means you'll have to deal with closing costs all over again — and you can expect to pay closing costs averaging \$5,779, 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 recoup your closing costs with the savings from your refi. If you can imagine yourself moving in a year or two, then refinancing probably isn't worth it.
• Will your existing mortgage give you an out? 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. So, get to work on cleaning up your credit.

What kind of answers did you come up with? If you think you had all the right ones and are now convinced that a refinance is the right move, then start by taking a look at today's best mortgage rates where you live.

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."

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