As we enter yet another week of higher interest rates, it just seems like complete foolishness to talk about a new mortgage, much less a refinance… right?

It’s worth noting that the cheapest way to borrow money still is borrowing against your home.1 So if you have a need, even with these higher rates, it can still make sense! There are two major things you want to consider before jumping in. If you want to talk about your specific circumstances, you can check out my about me page.

The first consideration is closing costs. These are the costs your lender charges, plus third party fees(title, credit report, appraisal, etc). Every time you do a mortgage loan (purchase or refinance) these fees apply. This is important to remember when refinancing when rates are a bit higher, because you will likely want to refinance a second time when the rates come back down. These costs can add up quickly! Thankfully there are options you can take to reduce or eliminate these extra costs in the form of credits. Often lenders offer an option called premium pricing. This is when you will take a slightly higher interest rate in exchange for lender credits. These credits can be used to offset your closing costs. This is a great way to not be “moving backward” with mounting loan costs by doing multiple refinances.

The second consideration is your term. If you’ve been paying on your mortgage for a few (or many) years going back out to a 30 year term can really impact your long term interest expense. I know most of you know about the 15 year mortgage (Dave Ramsey thinks this is the only mortgage worth getting). I’m here to tell you a less commonly known tool is the 18 year mortgage, the 21 year mortgage or the 27 year mortgage. Not all lenders offer custom mortgage terms, but several do and it’s worth discussing what a couple of years would do for your interest savings with your loan officer.

As always, there’s a lot of nuance when it comes to borrowing money. Not everything comes down to what interest rates are doing today.

1. In general. If you make enough phone calls you may find one weird lender who has crazy rates doing some crazy niche program.