Category Minimalist LIfestyle

Investing in Your Health from an Early Age

If you’re still in college or a recent grad working with a limited budget, the idea of implementing a healthy lifestyle can seem overwhelming and very expensive. If you aren’t careful, you might find yourself shelling out lots of cash in the name of health—whether you’re overspending on organic produce, designer athleticwear or monthly membership fees for a fancy gym. This can leave you feeling lost and overwhelmed about what a healthy lifestyle means or is worth to you. To prevent an unproductive cycle of spending, here are some tools to help you invest in your health wisely.

Intentional Inaction

While intentional inaction may sound counterproductive, it’s a great first step towards figuring out where your money is best spent. If you don’t figure out what works for you, you end up spending money on groceries and health regimes that aren’t beneficial at all.

Instead of following fad diets, begin to experiment on your own with nutritionally dense food. (A good rule of thumb is bright and bold-colored vegetables.) As you do this, pay attention to how these make you feel. After a meal do you feel energized or depleted? What foods are contributing to this? Increase your personal food knowledge and discover what foods act as fuel for your body and contribute to your overall health. This will help you allocate your budget towards foods that increase your energy and health versus empty calories or foods that deplete your energy. Shop locally to save money on fresh foods—you can often get a much better deal at a local produce stand or farmer’s market than a chain grocery store.

Another important factor of the intentional inaction phase of developing a healthy lifestyle is mindfulness (a.k.a. monitoring your thoughts). Self-talk can be helpful or hurtful to you, and whether it is good or bad self-talk, your body is always listening. The best part? Monitoring your thoughts doesn’t cost anything, and it can actually have healthy benefits! Pay attention to your daily thoughts and take time to analyze them in a way that is effective for you. Whether you prefer meditation, deep breathing or a daily journaling exercise, invest time in discovering how you talk to yourself. Are you standing in your own way, or are you acting as your own advocate? This awareness is the key to making real changes to your habits and your lifestyle.

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Manageable Small Tasks

Find small, low-cost steps to help get you started on your journey to health. You know yourself better than anyone, so it is up to you to decide how you can set yourself up for success. If you don’t know where to start, try some of these tips:

  • Do you enjoy working out only when you have fashionable workout gear? Treating yourself doesn’t have to mean breaking the budget. “We think like-new, on-trend activewear is the best gym motivator,” says Samantha Jacob, spokesperson for thredUP, an online thrift store that offers brand-name workout clothes at a discount. A little unsure about buying someone else’s gym clothes? Don’t be alarmed. “At thredUP, we have incredibly high quality standards, and only accept about 40 percent of the items we receive. Many of our activewear items are in like-new condition, or even new with tags! You can’t go wrong with up to 90 percent off Lululemon leggings,” Jacob notes.
  • Do you struggle to eat healthy during the week? Try meal planning. Browse Pinterest for meal inspiration, draft a few grocery lists or pick up a meal planning journal or new food storage containers. Taking these tiny steps can motivate you to cook a week’s worth of healthy food that you can grab and go when you’re exhausted after work or running late to class. The best part is meal planning eliminates those last-minute stops at fast food restaurants—bad for both your health and your wallet.
  • Does it feel impossible to get up for your morning run? Try setting your alarm to a favorite song and putting your running clothes and shoes right next to your bed. You’ll wake up in a better mood and have everything you need to get out the door within arm’s reach.

Regardless of what sets yourself up for success, gather some actionable items and write them down. Make these tasks small and manageable enough that they’ll stand up to the test of a busy schedule!

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Habitual Healthy Action

The trick to maintaining a healthy lifestyle is action through knowledge. Once you’ve given thought to what you need to get started, your mind will find more motivation because it now understands the value of doing this action towards a healthy lifestyle. Turn your small actions into habits by understanding the importance of investing in your health and what it truly means to you. Whether it’s a budget-friendly gym membership or a carefully planned Trader Joe’s shopping list, you’ll be equipped with tools to avoid extremes and empty costs by knowing what works for you and your lifestyle.

Catherine Claire is stylist, blogger and reiki practitioner who knows the importance of a healthy lifestyle. Catherine is the co-founder of The Crystal Press and curates content for her own blog, Cathclaire. She also uses her wellness expertise to write for thredUP on everything from yoga tips to budget-friendly workout fashion. Click here to view thredUP’s selection of designer athleticwear, including items from brands like Lululemon, Nike and Adidas.

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12 Smart Home Hacks That Can Save You Big

Smart homes are growing in popularity as new gadgets and tech hit the market every year, making smart devices more affordable and refined than ever. Most of us have seen robotic vacuums, but fewer of us have embraced things like smart beds, which send your sleep data to your phone, where you can also adjust your mattress’s temperature. 

Upgrading your home with smart devices can be costly upfront, but a little budgeting can help you build the high-tech home of your dreams. Plus, most devices will save you more than you spend within a few years. For example, LED smart lights can be as inexpensive as $6 each and they use 75 percent less energy and last three times longer than incandescent bulbs. 

From home maintenance to security, there are plenty of ways to make your home smarter and save time, energy, and cash. Read up on some of the best devices on the market, or jump to our smart home hacks infographic below.

Smart Home Appliances

Smart devices are designed to improve your quality of life by reducing the time spent on chores and home management tasks. This frees your time for more of what you love, like journaling or time with your family. 

smart thermostats can save 10% on heating and cooling

1. Smart Thermostat

When most consumers consider buying smart appliances they’re most interested in smart thermostats. It’s no surprise since it can lower your heating and cooling bill payments by 10 percent through learning your schedule and adjusting for when you’ll be home. 

2. Home Hub

At the center of your smart home is your home hub — the speaker or tablet you use to set your morning routines, leave messages for your family, and control all of your other smart devices. For as little as $30 you can have voice control over all of your connected devices.

LED bulbs use 70% less energy than incandescent

3.  Lights

LED smart bulbs can cost as little as $6 a bulb and all you need is an app to get started. If you want to make the most of your lights you can build a grid to connect your lights and make schedules for around $50.

Since smart bulbs are LEDs, switching from incandescent bulbs can save you nearly $75 a year, not including the costs saved from the ability to dim and control your lights from anywhere.

4. Vacuums

Robotic vacuums have become super affordable, with costs rivaling standard budget vacuums, and they’re smarter than ever. These vacuums keep your home clean and give you extra time to get more done.

5. Televisions

Smart televisions allow you to connect to the web and all of your favorite apps. This means you can ditch expensive cable packages and easily tune in to your favorite show through a streaming service — of which there are many free or bundled services.

6. Smart Plugs

Even when your devices are turned off or in standby mode, they may still be using electricity. This “vampire energy” may account for up to 23 percent of your total energy consumption. Smart plugs can be set to a schedule or controlled by an app to ensure any device you’re not using isn’t guzzling energy.

7. Sprinklers

Smart sprinklers consider your soil quality, plant needs, and even the weather to optimize your watering schedule. It’s estimated that a smart sprinkler could reduce the average American home’s water use by 7,600 gallons a year.

8. Smart Fridges

They may seem extravagant, but smart fridges are packed full of helpful functions that can save you some money in the long run. You can track your shopping list and expiration dates in the app to prevent food waste. If you forget to make a grocery list, many fridges have cameras inside so you can check what you need anytime from anywhere.

Smart Security

Loss and damages experienced by victims of property crimes totaled $16.4 billion in 2018, so it’s no surprise that 32 percent of consumers are interested in smart security devices to protect their homes. Smart security devices can help protect your assets and may even save you up to 20 percent on your homeowner’s insurance. 

Security cameras may reduce your home insurance costs and can prevent theft

9. Security Camera

Home security cameras are super affordable and easy to install. Not only do they have crystal-clear images, but they often offer night vision, sound and motion detection, and can easily be accessed from your cell phone. 

10. Doorbell Camera

If you’re not interested in a full surveillance system, then a simple doorbell camera may be perfect for you. Your front door is the most vulnerable part of your house, so you can keep an eye on who may be interested in your home and deter porch thieves. After all, 36 percent of Americans have had a package stolen — an average loss of $109.

11. Locks

Smart locks allow you to lock and unlock your door from anywhere. This can ease a lot of anxiety, and may even save you some money on a locksmith should you lose your keys.

12. Smart Sensors

Sensors on doors and windows send you an immediate alert when someone tries to enter or exit your home through these access points. Since 23 percent of burglars enter homes through first-floor windows, window sensors can be lifesavers.

Building a smart home can save you time and money, and can be a great conversation starter when you host guests. Whether your main concern is energy efficiency or home security, there’s a device that’s perfect for you and your family. 

Check out more smart home solutions to help you save below:

How smart devices can save you money

Sources: Deloitte | NRDC | CNET | EPA | SmartEnergy IP | Safewise | FBI | REOlink | C&R Research

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How the Home Buying and Selling Process Has Changed During COVID-19

Summer is usually a busy season for home buying and selling, but in this season of the coronavirus, it’s anything but typical.

As states are in various staging of opening up, sellers are dealing with new procedures with putting their homes up for sale and buyers are working hard to thoroughly search while still practicing social distancing.

I’ve found myself in the middle of this as I’m helping my mom this summer. She’s looking to retire in a few years and wants to be closer to the grandkids.

She’s already found work here in Raleigh and now during summer break, she’s selling her house and hunting for a place.

Being a Smart Home Buyer or Seller During This Pandemic

If you’re thinking of buying or selling a home during the pandemic, you need to be extra prepared and willing to adjust as needed.

I had the pleasure of speaking with Louis Guillama, VP of Real Estate Operations at Coastal Credit Union a few times to get his take on what it takes to be successful with buying and selling.

Here are some ways my mom and I have adapted. I hope they help you get a great deal while still practicing social distancing.

Selling Your House

Every seller I know wants to get the most out of their house when they list it. With the pandemic, it can be a real challenge.

However, there are some crucial things you can do to really make your house shine.

Create buzz for your house with incredible pictures and videos. Great photos will help you sell in any season, but are especially more important now. Photographs were a wonderful way to attract interested buyers for a tour, but in some cases where restrictions are strict, they are the tour!

Some tips to make your house looks its best for photos include:

  • Stage your home. Make it easy for buyers to fall in love with your home by taking the time to define and decorate your space.
  • Declutter and depersonalize your space. You want your buyers to imagine that this is their home, so pack away your photos, certificates, and other personal stuff for your next place.
  • Take photos with natural light. If possible, choose a sunny day to take pictures as it can make your house look more inviting.
  • Shoot from the corner of the room. You can highlight rooms better based on where you stand. The ‘directly in front’ method isn’t usually the way to go. Instead, tuck yourself into the corner so you can get a wide shot of the space.

Video is practically a must now as there are potential buyers who have health conditions. Being able to see your home online allows you to cast a wider net. Many agents today are able to create a video based on your photos.

If this all seems overwhelming, then you may want to talk to your agent and ask for a referral. They may know someone with experience who can showcase your home perfectly!

Pictures are wonderful, but there are still some other key pieces you want to watch.

Be objective in your pricing. One huge mistake sellers typically make is mixing up sentimental value with market value. Sit down with your agent and review comparable sales so you can get a clear idea of the best price to list it.

You also have to be mindful if the market has shifted in your area. Hard hit cities may become buyer’s markets now.

Be prepared to go virtual with closing. The closing process has changed to accommodate the social distancing requirement. My mom had a choice of signing at home with digital documents or meeting up at an office.

Buying a House During the Pandemic

Buying a house under normal conditions can be stressful under normal conditions, with a pandemic, you can understandably be anxious. Preparing for your house hunt can make it more enjoyable.

According to Louis Guillama, VP of Real Estate Operations at Coastal Credit Union, snagging a great deal when buying a house requires doing some key legwork.

Run your own numbers. Yes, this is especially true when you’re the buyer. Some lenders will approve you for a loan higher than you can comfortably carry. When you consider other goals -like saving for retirement, taking care of kids, and yes, vacations  – you want to be conservative with your finances.

While 30% of your income is given as a guideline, you may want to use 25% of your net income as a better guide so you can have a good financial buffer in your budget.

Nail down your need and wish list. Now is not the time to tour every single house that comes on the market. You have to be strategic about the houses you visit, so sit down and define what you absolutely need and what would be nice to have.

For my mom, she was adamant getting a house with about 3 bedrooms and 2 baths and that was 15 mins or less from her job and where we live.

She was flexible on the yard size and the town she was in (there are several great ones around Raleigh).  With that information and her budget, we’ve been able to weed out many homes and focused on one that she would absolutely love.

Being a Savvy House Hunter

Adding a layer or two of stress, besides being out of town, my mom also has an underlying medical condition.

To assist, I volunteered to do the actual tours with her real estate agent. If you don’t have someone to go to the in-person visits for you, you’ can still work with your agent and have a successful house hunt.

First off, go through the virtual tour of any home you’re interested in. This will allow you to get a general feel of the layout and whether or not it’ll work for you.

You’ll also want to comb through the photos to see which areas you need to check out further. Are there any signs of damage like cracks, stains, or are certain rooms missing? Either can be a sign of trouble. You can then have your agent call you through video and go through those details.

Don’t be an HGTV kind of buyer, where you focus on things like paint and decor. Instead, Louis advised that you hone in on key systems like electrical, HVAC, and plumbing. You don’t want to get hit with a big repair after you buy your house.

Speaking of home tours and taking a careful look, please make sure you protect yourself. While some areas have restrictions on visits, that doesn’t mean it’s enforced.

In one house I looked at, the agent and I were alone to inspect while the next interested buyers were outside waiting. Another house had us make an appointment as well, but halfway through our tour, several other buyers and agents were in and around the property.

Since part of the in-person tours involves checking around appliances, cabinets, switches, and so forth, you want to bring gloves and a mask.

During your tours, make sure you check the neighborhood as well. When you have neighbors who are taking care of their property it can give you more confidence about your choice.

Speaking of neighborhoods, if you’re looking for a great deal, don’t limit yourself to only the popular neighborhoods (which can be overpriced). Instead, dig for the hidden gems in your city or town.

Stay Safe!

I hope these tips not only help you sell and buy a house during these unprecedented times but also give you ideas on how to stay safe!

I’d love to get your take – how have you adjusted with buying and selling your home?

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Financing Home Improvement Projects During Coronavirus

Many of us are home much more than usual these days, and you may be thinking about ways to improve your home — whether it’s expanding your new home office, upgrading your air conditioning, or putting in a new swimming pool for the summer. It’s easy to dream about those fun new projects, but figuring out how to pay for them can be a challenge.

It’s not just your lifestyle that’s been impacted by the coronavirus pandemic. Many banks, lenders, and fintech companies are changing the way they lend money to customers, so your options for financing a home improvement project may have changed.

In the first few months of the coronavirus outbreak in the United States, many lenders pulled back on Home Equity Lines of Credit and Cash Out Refinances — either halting new applications or tightening the approval criteria. The best financing options may be changing based on what’s available at a given time, so take the time to investigate what is going on in the market and what your options are. Here’s a place to start.

This article will walk you through:

  • Key questions to ask yourself when evaluating your financing options
  • 5 financing options you might be considering, and the pros and cons of each option
    • HELOC
    • Cash-out Refi
    • Personal Loan
    • Traditional Credit Card
    • Fintech Alternatives

What questions should you ask yourself when choosing a financing option for your home improvement project?

  1. Are you in a hurry to get started? Do you need to replace a major appliance immediately, or do you have some time before construction begins? Some financing is faster than others, but you may pay a price for speed.
  2. Will your costs happen all at once or overtime? If your project will have ongoing costs (like many home improvement endeavors) it might be attractive to only pay interest on what you’ve spent and to have the flexibility of revolving credit that allows you to spend, pay it back, and spend again.
  3. Is the cost of your project a sure thing or will it creep up? Even the best budgets have surprises. Choosing a more flexible financing option now may prevent you from having to apply for credit again later, which may save you money and limit hard inquiries which can ding your credit score.
  4. Do you have equity in your home you can tap into? Do you want to? Financing that relies on the equity in your home often has lower interest rates than unsecured options. If you have equity available in your home, are you comfortable using your home as collateral and potentially risking foreclosure if you can’t make your payments?
  5. How much flexibility do you need in your monthly payments? In a time of uncertainty, it may be more attractive to choose an option with fixed rates and payments that you can plan around.
  6. What is available in the market right now? In a time of unprecedented uncertainty, many lenders have temporarily stopped offering certain products or seriously raised the bar for what it takes to qualify. Make sure you aren’t counting on funding from a financing product that isn’t available anymore. What are your financing options? The news about COVID-19 changes daily, so keep in mind that the economy, stock market, and the lending policies of various lenders may change.

What are your financing options?

The news about COVID-19 changes daily, so keep in mind that the economy, stock market and the lending policies of various lenders may change.

1. Home equity line of credit (HELOC)

What is a HELOC and how does it work? A HELOC is a revolving line of credit (like a credit card), which means you can borrow as much as you need, when you need it, up to the limit on your credit line. As you pay down the balance, you can borrow more money again.

Your credit line is based on the equity in your home and your credit, so you must own your home and have some equity built up in order to qualify for a HELOC.

What are the Pros and Cons of a HELOC?

Great for:

  • Projects with ongoing expenses — flexibility to spend, pay down the balance, spend again
  • Paying less interest — lower rates than most unsecured products, and revolving structure where you only pay on the amount you’ve borrowed
  • Tax deductions — some opportunities for a tax deduction of interest, depending on how the funds are used
Not great for:
  • Renters, as they are not eligible for dwelling-secured financing
  • Homeowners worried about foreclosure risk
  • Fast funding — underwriting and appraisal process means it can take weeks to get your money
  • Payment- or rate-sensitive people — rates are typically variable so may rise
  • People looking for financing right now — several banks halted new HELOC applications in May in response to the COVID-19 pandemic so availability may be very limited.
Bottom Line on HELOCs
HELOCs are often one of the more affordable and flexible financing options for home improvement work, but it may be especially difficult to get one in the current environment and the process is lengthy compared to other options.

2. Cash-Out Refinance

What is a cash-out refinance and how does it work? A cash-out refinance is when you replace your existing mortgage with a new mortgage for more than you owe on your home. The difference goes to you in cash, which you can spend on whatever you want.

Your cash out amount is based on the equity in your home and your credit, so you must own your home and have some equity built up in order to qualify for a cash-out refinance.

What are the Pros and Cons of a Cash-Out Refinance?
Great for:
  • Paying less interest–rates typically lower than unsecured products and many HELOCs
  • Simplified, predictable payments — single monthly payment for your mortgage and your home improvement project, with fixed rates widely available
  • Tax deductions — some opportunities for a tax deduction of interest, depending on how the funds are used
Not Great For:
  • Renters, as they are not eligible for dwelling-secured financing
  • Homeowners worried about foreclosure risk
  • Payment- or rate-sensitive people — your rate on your entire mortgage may go up due to a higher loan amount
  • Fast funding — underwriting and appraisal process means it can take weeks to get your money
  • People looking for financing right now — due to COVID-19, many lenders have tightened requirements for mortgages in general and cash-out refis in particular
Bottom Line on Cash-Out Refinancing

Cash-out refinancing can be an affordable, fixed-rate option for financing your home improvement project but the process may take considerably longer than it would have during pre-pandemic days and the requirements may be more stringent.

3. Personal Loans

What is a Personal Loan and how does it work? Personal loans are unsecured loans that you receive as a lump sum of cash to use however you like. They typically have fixed rates and terms, which means you pay the loan back in set installments over a set period of time.

What are the Pros and Cons of a Personal Loan?

Great For:

  • Fast funding — approval process is fast and usually 100% online
  • Renters, homeowners concerned with foreclosure risk — available regardless of housing status
  • Fixed scope of work — lump sum of cash makes it harder to overspend on your project
  • Better rates than other unsecured options — rates are generally lower than traditional credit cards

Not Great For:

  • Projects with ongoing expenses or unclear scope — lump sum of money can only be used once without borrowing again. May result in additional hard inquiries and a negative impact on your score if you need more credit
  • Paying less interest — you pay interest on your total outstanding balance, regardless of how much you’ve spent
  • Some homeowners — rates are typically higher than secured options

Bottom Line on Personal Loans

Personal loans are a fast and affordable way to borrow a set amount of money. This may be a good fit for a project with a set budget or a lot of one-time, up-front cost.

4. Traditional Credit Cards

What is a traditional credit card and how does it work? Most of us are familiar with traditional credit cards. They are revolving lines of credit, which means you can spend up to your credit limit, and then pay back your outstanding balance and spend again. They can be used wherever credit cards are accepted, and some offer (expensive) cash options as well.

What are the Pros and Cons of a Traditional Credit Card?

Great For:

  • Fast funding — approval process is very fast and many cards are available for instant use
  • Projects with ongoing expenses — the flexibility to spend, pay down the balance, spend again
  • Pay for what you use — revolving structure means you only pay interest on what you’ve spent
  • Potential for attractive short term rates — promotional rates may save you money in interest if you can repay quickly

Not Great For:

  • Paying less interest — higher rates than most other options
  • Predictable payments — rates are typically variable and can rise
  • Overspenders — cards make it easy to overspend and run up unmanageable debt
  • Cash expenses — most cards have very expensive cash advances

Bottom Line on Traditional Credit Cards

Traditional credit cards are ubiquitous but expensive. They offer speed and flexibility compared to many other options but they will almost certainly cost you more money.

5. Fintech Alternatives

What alternatives are available?

Online financial technology (fintech) companies offer a variety of financing alternatives that may work well for your situation. Here are a few examples:

  • Upgrade Card
    • Upgrade Card combines the flexibility of a card (can be used wherever VISA(R) is accepted) with the low cost and predictability of a personal loan (each month, purchases are converted to a fixed-rate installment loan). This option is great for projects with ongoing expenses and for rate-sensitive people looking for quick funding.
  • Affirm or Afterpay
    • These companies offer fixed-rate installment loans at the point of sale at many retailers. This might be a great fit for a home improvement project with a big upfront cost from a single store (for example, new furniture from one retailer) but offers less flexibility than other revolving products.
  • More!
    • Fintech companies are always introducing new products, so it’s worth taking the time to see what else is out there.

Bottom Line

Financing your home improvement project during a pandemic may complicate things, but it doesn’t need to hold you back. Don’t be discouraged if the loan you’d planned to apply for isn’t available — take the time to understand your financing options and keep an open mind. There may still be a great way to get the home office or backyard of your dreams!

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Minimalist LIfestyle

Rent Budget Calculator: How Much Rent Can I Afford?

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Want to know how much rent you can actually afford? Here’s how the rent budget calculator works: Enter your monthly after-tax income and our calculator will tell you how much you can afford to spend on rent. Adjust the slider to see how spending more or less leaves room in your budget for savings and discretionary spending.

Rent Budget Calculator

You can afford to spend up to


on rent

As a general rule, you should spend no more than 30% of your monthly income on rent. This may be higher or lower, depending on the other expenses you have, such as any debt payments you need to make.

Use this slider to see how spending more or less on rent affects your budget:

Rent This should include all housing expenses like your utilities.


Other Expenses This includes other essentials like insurance, groceries, or minimum debt payments you’re required to make.


Discretionary This includes non-essential spending like gym memberships or dining out.


Savings/Extra Debt This includes savings for things like a rainy day fund and any extra debt payments.


According to the 50/30/20 budget rule, necessities like rent, utilities, insurance, and minimum debt payments should take up 50% of your after-tax income, any wants should take up 30%, and savings or paying off any extra debt payments should take up 20%.

How to Determine How Much Rent You Can Truly Afford

Apartment hunting is difficult enough as it is, but our rent budget calculator can help simplify the equation. Whether you’re moving out for the first time or you’re a seasoned pro, knowing how much rent you can afford can make the apartment search a lot easier. 

In general, experts find the average spending on rent and utilities to be around 30 percent of your monthly income. Even though this percentage can vary widely based on income, this rule of thumb was set to ensure most people will not be cost-burdened by their living expenses. If you’re paying down significant debts or are saving for a big purchase, a thrifty budget might put your rent at 20 percent of your total monthly income. On the other hand, if your living space is a huge priority, you might choose to splurge by spending 40 percent of your income on rent. 

There’s ultimately a huge number of factors that go into determining how much you spend on rent. Things like the location, size, and amenities can make all the difference. You’ll have to decide for yourself how much you’re willing to spend and forego in other areas. 

To help you find your dream apartment, we created these helpful printables. There’s an apartment comparison checklist if you’re looking at different options and questions to ask your realtor to make the search easier. To spruce your space up on the cheap, there’s also a printable decor sign. Check them all out below:

Download Apartment Printables

Next Step: Set Up Your Budget

Once you understand how much of your income will go towards your rent, it’s the perfect time to take another look at your budget. An easy place to start is with a 50/30/20 budget, which means you spend 50 percent of your income on necessities, 30 percent on your wants, and 20 percent on your savings or debts. 

After you move to your new apartment, your finances may change. If you find you have a bit more (or less) wiggle room, Mint can help you stay on top of your budget:

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Home Equity Loan Vs. Cash-Out Refinance

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Being a homeowner comes with plenty of perks: you get to set roots at your residence, decorate and paint however you want, and above all, use your home as an investment. If you’ve built up equity in your home, you may be looking for other ways to benefit from your investment.

Home equity loans and cash-out refinances are two types of loans consumers can use to take advantage of their home equity by saving money on loan payments, simplifying debt repayment, and access additional capital.

If you’ve considered either of these loan types, it’s important to compare how they work and the benefits and drawbacks of each before you make your decision. In this article, we’ll discuss home equity loans vs. cash-out benefits, drawbacks, and give you the information you need to determine which one is right for your financial situation.

Home Equity Loan Definition

A home equity loan allows you to borrow money using your home equity (the value of your property, minus remaining mortgage) as collateral. Home equity loans are also known as second mortgages.

Cash-Out Refinance Definition

A cash-out refinance is a loan that allows homeowners to convert their existing home equity into cash that they can use for whatever they want.

Similarities Between Home Equity Loans And Cash-Out Refinances

Home equity loans and cash-out refinances are both loan types that use home equity as loan collateral. In addition, they share the following similarities:

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4 Unexpected Benefits from Turning Down Your Thermostat ::

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Comparing Home Equity Loan Vs. Cash-Out Refinances

We’ll dive deeper into how home equity loans and cash-out refis work and when they’re most applicable a little later on in this post. For now, we’ll cover a few of the main differences between home equity loans and cash-out refinances:

Reasons To Use A Home Equity Loan Or A Cash-Out Refinance

Now that you know a little bit about them, let’s discuss why some homeowners choose home equity loans vs. cash-out refinances, and vice versa.

Home Equity Loans

Home equity loans enable you to borrow a predetermined amount of money, for a set term, at a fixed or variable rate, just like a mortgage. This is why home equity loans are considered “second mortgages.” Lenders typically allow homeowners to borrow 80 – 90% of the home’s value in total, which includes both mortgages. Home equity loans generally come with a 15-year payback time frame.

Home equity loans can be used to refinance an existing mortgage or:

If you’ve built up equity in your home, using a home equity loan to refinance can be especially effective when interest rates are high.

Advantages Of Home Equity Loans

Disadvantages Of Home Equity Loans

Cash-Out Refinances

As you learned above, cash-out refinances share many of the same benefits of home equity loans, but both loan types have their own pros and cons, too. Let’s take a look.

Advantages Of Cash-Out Refinances

Disadvantages Of Cash-Out Refinances

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Consumer IQ 101 – Mind the Pre-Checked Boxes ::

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Which Loan Is Right For Me?

Should you opt for a cash-out refinance or a home equity loan? It depends on your financial situation and preferences to determine which loan makes the most sense for you! If you’re unsure, consider speaking with a financial advisor to see how the benefits and drawbacks of each loan type apply to your circumstances.

In general, when evaluating loan types, you may want to consider:

Now let’s take a look at a few examples where home equity loans and cash-out refinances can be most beneficial.

A home equity loan may be a good choice if:

A cash-out refinance may be a good option for you if:

important to note that since both of these loan types use your home’s equity as collateral, you run the risk of having your home foreclosed if you are unable to make your payments.

Key Takeaways

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8 Refinance Tips That Will Save You Time and Money

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If you’re like most homeowners in America, you most likely had to take out a mortgage to pay for your home. A mortgage is a loan that helps you buy a house, and your mortgage lender will tack on an interest rate on top of your loan amount for their risk of lending you money.

Interest rates are never fun, as they increase the total amount of money you owe, which is why you want a mortgage with the lowest rate possible. That’s where refinancing comes in. Refinancing a loan is where a lender pays off your existing loan and replaces it with a new one, typically with a better interest rate and loan terms. There are many types of loans you can refinance, such as your car loan or student loans. However, today, we’re going to talk about refinancing your mortgage.

It’s important to know what to expect when you refinance your mortgage, as it can save you both time and money. Below, you’ll find 8 refinance tips that can make getting a new mortgage loan easier than ever. Or, use the provided links to jump to a refinance tip that interests you.

  1. Determine Why You Want to Refinance
  2. Remove Errors On Your Credit Report
  3. Have Your Financial Documents Readily Available
  4. Work On Building Your Credit Score
  5. Choose The Right Lender
  6. Lock Your Interest Rate
  7. Anticipate Closing Costs
  8. Prepare Your Home For Appraisal

Key Takeaways

1. Determine Why You Want to Refinance

There are many reasons why you may want to refinance your mortgage. Determining this reason will help you save time and money because you’ll be able to go to your lender with a clear plan of action.

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How to Budget for a Bathroom Remodel ::

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Some of the main reasons why you may consider refinancing your loan include:

you’ve determined the reason you want to refinance and improve your loan, search for a lender. There are plenty of lenders who specialize in different types of refinancing, so match one who meets your needs.

2. Remove Errors On Your Credit Report

This refinance tip is arguably the most important when it comes to saving money when you get a refinance. Your credit score shows lenders your ability to pay back lent money. A credit score that’s too low will show lenders you may be a risky investment and will tack on a higher interest rate. A high credit score will show lenders you’re trustworthy and will most likely make your monthly payments on time, giving you a lower interest rate.

If your credit report is riddled with errors, it’s time to take action. You can get a free credit report with Mint to closely track your credit score to ensure no errors are holding you back from an attractive new home loan.

Some common credit reporting errors you can dispute include:

important to check your credit score regularly. If you notice any errors on your credit report, contact the credit reporting bureau that issued the report and solve the error. There are three major credit reporting bureaus, TransUnion®, Equifax®, and Experian. You must contact each individually if there’s an error on your credit report.

3. Have Your Financial Documents Readily Available

When you apply for a refinance, you’re going to want to prove to your lender that they can trust you to make your monthly payments on time. You can prove your responsibility by gathering all of your financial documents needed for your application. Documents your lender will most likely ask for include:

you’re applying for a refinance with someone else, such as your spouse, your lender will ask for their information as well. And for those of you who are self-employed, be prepared with your full tax return and other documentation that verifies your income.

Being prepared with all of the right forms and documents will help you refinance much quicker. To stay on schedule, make sure you stay in constant contact with your lender and respond to any requests for additional information during underwriting as soon as you can.

4. Work On Building Your Credit Score

As previously stated, your credit score is one of the most important factors that determine the rate and term of your refinance. A low credit score will cost you more money in the long run because your lender will most likely place a higher interest rate on your new home loan.

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5 Reasons Credit Cards Get a Bad Rap ::

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When your score is high, then you may want to consider applying for a refinance. Avoid opening any new lines of credit at least 2 months prior to your refinance, as hard credit checks can temporarily lower your score.

5. Choose The Right Lender

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9 Things to Remove From Your Resume Right Now ::

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Shopping around for the right lender can save you money in the long run. Don’t feel like you need to refinance with the same lender that issued your original mortgage. Doing your research and scouting out lenders and their fees, interest rates, and availability can help you find a refinance deal you’re happy with. Use a refinance calculator to calculate your monthly payment and review your loan options.

To make things easier, note each lender’s answers in a chart to compare later. This can help you make the best decision.

6. Lock Your Interest Rate

Another refinance tip you should be aware of is the fact that you can lock your interest rate. Depending on market trends, interest rates can fluctuate, so it’s important to lock your rate if you’re happy with it or risk the chance that it increases before you close on your loan.

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Consumer Secrets From the World’s Smartest Traveler ::

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When you’re applying for your refinance, ask your lender if locking your interest rate is free or comes with a fee. You can also ask how long you can lock your interest rate—most lenders grant you 30 – 90 days. You can also explore your state’s interest rates at to ensure you’re getting a fair rate.

However, be aware that locking your interest rate can come with a few drawbacks. If interest rates drop, you may feel as if you wasted money as you can’t take advantage of the lower interest rate. Additionally, depending on your lender, locking your interest rate past a 45-day window can be expensive. Make sure you take time to talk with your lender to determine whether locking your interest rate works for your financial situation.

7. Anticipate Closing Costs

Sure, your new loan may seem like a good deal, but did you forget about all the other costs and fees associated with getting a new home loan? It’s important you anticipate closing costs when you apply to refinance, as these can add up rather quickly.

Some closing costs you should be aware of include:

common that most closing costs will range between 2% – 3% of your total loan value. Depending on your lender, you might have the option to roll these costs into your loan. But be aware, doing so will increase the amount of your loan, which means you’ll be paying more in interest over the lifetime of your loan.

Anticipating closing costs and having the money upfront to pay for them out of pocket will save you time and headaches.

8. Prepare Your Home For Appraisal

The final refinancing tip is to prepare your home for appraisal. Many lenders will ask you to get an appraisal when you apply for a refinance to determine how much your home is worth. Luckily, there are a few tricks you can use to increase the value of your home:

Key Takeaways

Our list of refinancing tips can save you time and money. To start your journey to a new home loan, sit down and determine why you want to refinance. Whether it be to lower your interest rate or get a lower payment, this will help you find a lender that will work for you.

Anticipating closing costs and doing your best to pay for them upfront can save you money by not adding those costs to your loan. Finally, lenders often ask for an appraisal of your home, so prepare your home with low-cost updates to increase its value. Still have more questions about refinancing? Check out this refinance guide to learn more.

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What is a Hard Money Loan & How Do They Work?

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Hard money loans are a way for borrowers to take out a real estate loan without having to work with traditional lenders, like banks, credit unions, or mortgage agencies. Traditional lenders usually base their willingness to lend you money, and the interest rate they’ll charge you, on factors like your income and credit score.

➔   Hard money definition: a hard money loan is a loan borrowed against tangible collateral, rather than by using a credit assessment

However, for those who want to close on property sale quickly, or those who have a low credit score, hard money can be an enticing alternative. In this post, we’ll cover the basics of hard money loans, like how they work, what you can use them for, and some of the advantages and disadvantages of using a hard money loan. You can skip ahead to any of those topics by using the links here:

Before you can decide whether a hard money loan is a reasonable option for your situation, it’s good to know how they work. Let’s take a look at that now.

Hard money basics

It’s easiest to understand how hard money loans work by contrasting them with traditional loans or mortgages. Few people have the liquid cash on hand to simply buy a home outright. So, instead, they take out a loan from a bank or credit union. You purchase the property with the money they’ve lent you, then you make payments back to them over the course of ten to thirty or so years, all as part of a manageable debt repayment strategy.

Traditional mortgages come with some requirements. For instance, banks want to know that you’re a reliable lender. They can assess that by looking at your credit history, your personal track record when it comes to borrowing money (say, for college, or to buy a car). This is measured by your credit score.

Your credit score lets banks and other agencies know how likely you are to pay the money they lend you back, based on how reliably you’ve done that in the past. The higher the score, the more likely you are to pay your borrowed money back — and, crucially, the more likely you are to get a reasonable interest rate from the bank.

How do hard money loans work?

Hard money loans, on the other hand, usually do not work by assessing your past credit. Instead, they work by taking collateral, or hard money, against the loan. They won’t check your credit, but they will ask that you offer something you own in exchange if you cannot pay back the loan. What is hard money? Basically, a tangible asset, like gold, silver or property. Here are a few examples of items that might be used for collateral:

If you fail to keep up with payments, the loan agency may have the right to possess the things that you’ve offered up as collateral. That’s where the term hard money comes from; it’s borrowed against a tangible asset, rather than based on your merits as a borrower in the past.

Because the hard money lending agency typically does not perform an extensive check on your credit history, the process can be completed and your loan approved much more quickly. These loans are also sometimes appealing for those with poor credit, such as those who have defaulted on a loan in the past, or those who have been through bankruptcy.

Importantly, hard money loans also have comparatively high interest rates. In fact, rates can be as high as 15%, as opposed to traditional loans, which are often closer to 4%. That makes the loans fairly expensive, especially once other expenses like closing costs, service fees, and signing fees are factored in.

Most hard money loans have shorter repayment periods, however — anywhere from one to five years, meaning there is less time for the interest on the loan to accrue. Though they are expensive, they do have their purposes. Let’s go over a few cases where borrowers might use a hard money loan.

What are hard money loans used for?

Hard money loans are most often used to buy property. Though in most ordinary cases, a traditional mortgage is likely a more financially stable option, there are times when a hard money loan may come in handy.

Next, let’s cover the pros and cons that come along with a hard money loan.

Pros and cons of hard money loans

As with any financial product, hard money loans come with pros and cons. Before getting serious about looking into a hard money loan, it’s smart to be thoroughly versed in their advantages and disadvantages. Let’s take a look.



Because of these fairly significant disadvantages, it’s always advisable to approach hard money loans with caution. Typically, if you can comfortably consider a traditional mortgage, that tends to be a safer alternative when your aim is purchasing property. Banks and credit unions tend to be more reputable than many hard money lending companies, and the amount you’re likely to spend in interest is substantially lower.

Hard money loan takeaways

Before you go, keep these hard money loan takeaways in mind, and remember to consider them before taking out a hard money loan in the future.


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How Do Cash-Out Refinances Work?

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If you’re a homeowner looking to take advantage of the equity you’ve built in your home, you might consider how a cash-out refinance could help you meet your financial goals. Like any financial decision, it’s best to get a good look at how this might impact your finances as a whole. In this post, we’ll answer the following questions, and more.

What Is A Cash-Out Refinance?

A cash-out refinance is a loan that allows homeowners to use the equity they’ve built up in their home to take out a lump sum of cash to help take care of expenses, such as home repairs, improvements, or to pay off high-interest debts. Cash-out refis can technically be used for whatever the borrower pleases, but certain uses may be more beneficial than others.

Why Do People Refinance?

There are several reasons people choose to refinance their mortgage with a cash-out refinance or another refinancing method. Here are a few of the most common:

Reducing Your Interest Rate: Refinancing your loan could help you secure a lower interest rate than you had when you got your original loan – especially if your credit score has improved. When you refinance with a lower interest rate, more of your monthly payment goes toward the principal rather than interest, which could also help you pay off your loan quicker!

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What is the New myRA Retirement Account? ::

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Use Home Equity: The most common reason people use cash-out refinances specifically, is that they allow you to gain access to cash quickly. If you need to make some repairs, or want to increase the value of your property, this extra money can help you cover the expenses.

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6 Potential Tax Breaks for Pet Owners ::

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How Does A Cash-Out Refinance Work?

Now that you know the basics of cash-out refinances, let’s take a closer look at how they actually work.

Cash-out refinances allow homeowners to take out between 80 – 90% of their home equity.[1]  Equity can be earned through the following methods:

  1. Your home increases in value.
  2. Each time you make a mortgage payment, you gain more equity in your home.

To qualify for a cash-out refinance, lenders will expect you to have a certain amount of equity built up in your home. (We’ll discuss more on how you can apply for a cash-out refinance a little later on in this post.)

When you get a cash-out refinance, the lender allows you to convert the equity you’ve built in your home into cash in exchange for a larger mortgage. Unlike a second mortgage, a cash-out refinance is a single, larger loan that pays off and ultimately takes the place of your original mortgage. When you pay off your original loan, your relationship with that lender is terminated and you move forward with your refinanced loan. In other words, the refinanced loan is used to pay off your first loan and now you’ll need to pay off the remaining balance with your new lender.

Let’s take a look at an example to help you get a better understanding of how cash-out refinances work:

Hunter bought a home for $450,000 and has paid off $100,000 of her original mortgage, leaving her with a balance of $350,000. She has an electrical issue that will cost her $5,000, and she also wants to renovate her kitchen to help increase the value of her home, which will cost $30,000. So, she’ll want to borrow a total of $35,000 via cash-out refinance.

Remember, Hunter owes $350,000 on her mortgage so if she takes out a cash-out refi, her new mortgage is:

$350,000 + $35,000 = $385,000

Pros And Cons Of Cash-Out Refinances

Your home is likely one of the biggest investments you’ll make in your lifetime, so it’s important to think critically before deciding if you should take out a cash-out refinance. Here are some of the pros and cons you might want to consider before following through with a cash-out refinance.

Pro: You Can Make Home Improvements And Renovations

You can use the money you take out from a cash-out refi to reinvest in your home by making improvements to your property. From leaky faucets to adding amenities, cash-out refinances can be a great way to add value to your home.

Pro: You Can Consolidate Debt

Another way you can use the borrowed funds from a cash-out refinance is to help you consolidate high-interest debt, like credit cards.

Pro: You Can Get A Lower Interest Rate

As we mentioned before, getting a lower interest rate is one of the main reasons homeowners choose to refinance their mortgage. If you’ve built up equity in your home and raised your credit score, you may be able to secure a much lower interest rate than your original mortgage. This means more of your monthly payments go toward paying off the principal rather than interest payments.

Con: You Still Have To Leave Equity

Cash-out refinances don’t enable you to take out all of the equity you’ve built in your home. Lenders typically require homeowners to leave 15-20% equity in their home. This means that you should consider whether the amount of equity you can take out is enough to accomplish your financial goals.

Con: Associated Fees

To take out a cash-out refinance, you’ll likely need to pay several associated fees which, depending on the cost, could mean it might not make financial sense if you don’t plan on staying in the home long enough to break even or recoup that cost. Here are some of the fees you might expect to pay when refinancing:

Con: Changing Loan Terms

When you refinance your mortgage, you’re replacing your original mortgage with an entirely new one. This means your interest rate and loan terms (maturity date, monthly payments, etc.) are all likely to change. Ideally, these modified loan terms would work in your benefit, but it can be challenging for some homeowners to adjust.

Con: Risk Of Foreclosure

If you opt for a cash-out refinance, you’re putting your property on the line in favor of quick cash because cash-out refis use your home as loan collateral. This means that if you fail to make your loan repayments, you could run the risk of having your home foreclosed.

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How To Apply For A Cash-Out Refinance

If a cash-out refinance seems like the right move for you, here are a few tips to help you apply.

○        Bank statements

○        W-2s

○        Pay stubs

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Minimalist LIfestyle Mortgage Refinance

Should You Refinance Your Mortgage While Rates Are Low?

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The mortgage industry (and interest rates) have a somewhat complicated relationship with the rest of the overall economy. Generally speaking, when the economy is doing very well, the Federal Reserve will start raising interest rates. This can help to try and ward off inflation which is not great for the economy. Conversely, when overall economic conditions are poor, the Federal Reserve will LOWER the interest rates, in an attempt to spur economic growth. Since the interest rates on most mortgage products are (directly or indirectly) tied to the overall Federal Reserve interest rate, these actions have a pretty significant impact on mortgage interest rates.

Mortgage rates can fluctuate daily or even hourly, so it’s good to have a basic idea of what you want to do and what might make you want to refinance. With mortgage rates at historic lows, let’s take a look at what that means and whether you should refinance while rates are low.

Mortgage rates are at historic lows

The mortgage market is a fairly complicated market with several different types of mortgages available. So when you hear that mortgage rates are at “historic lows”, it’s important to understand what type of mortgage is being talked about. Usually, the 30-year fixed mortgage is the loan product that is considered the “standard” mortgage. So if you hear about rates “dropping”, you’re usually hearing about the 30-year fixed. It is true that usually (but not always!) rates for different types of products rise and fall together.

(SEE ALSO: What is a “Good” interest rate?)

It was not uncommon in the 1970s or 1980s to see mortgage rates with double-digit interest rates. Since that time, interest rates have generally steadily dropped, to a low around 3.5% in 2012. Mortgage rates fluctuated in the 3-4% range for the next several years before rising to around 4.5% in 2018 and 2019. 

The recent coronavirus pandemic has affected the housing market and sent rates on the 30-year fixed mortgage down under 3.5%, around the lowest those rates have ever been.

Should you refinance to a 30-year mortgage?

As the name implies, a 30-year fixed mortgage will lock in your interest rate for the duration of your loan. You’ll have 360 monthly payments, all of the same amount. The exact amount you pay will depend on the amount of your loan, the duration and the interest rate. You can use our Loan Repayment calculator to find out the exact amount of your monthly payment. Keep in mind that that monthly payment amount will not include your property taxes or home insurance. Your lender may require that you set up an escrow account, or else you’ll need to make sure to budget for those expenses on top of your monthly mortgage payment.

The 30-year fixed mortgage will usually give you your lowest monthly payment. In fact, even if you currently have a 30 year fixed mortgage, you will likely save on your monthly payment by refinancing now. That is because of 2 reasons – the rates are likely lower than when you first got your mortgage and because you’ve paid down your mortgage balance so the amount you’re refinancing is less. 

Should you refinance to a 15 or 20-year mortgage?

Another option to consider when refinancing is to refinance to a 15 or 20-year mortgage. A mortgage with a shorter term (like 15 or 20 years) will usually have a lower interest rate than the 30-year fixed mortgage. However, because the shorter term means there are fewer payments, your payment may still go up.

If you’re currently on a 30-year mortgage, you’ll likely (but not always) find that the monthly payments on a 15 or 20-year mortgage will be higher. The good news is that your mortgage will be paid off 10 or 15 years sooner! Overall you’ll pay quite a bit less in interest.

An example of refinancing to a shorter-term mortgage

To illustrate the types of choices you have with refinance, let’s look at an example. Our fictional homeowner bought her house 5 years ago with a mortgage of $250,000, and took out a 30 year fixed mortgage. Her monthly principal and interest payments have been $1,267 per month, and after 60 payments, her mortgage balance is now $228,305.36 with 25 years remaining.

She’s looking to refinance with today’s low rates. We’ll say that her closing costs will make her new loan payoff amount $230,000. Again using our Loan Repayment Calculator, here are some options she could consider:

You can see that refinancing to another 30-year mortgage would drop her payments by $234 each month. That comes at a cost of adding 30 more years to the total time it takes to repay. With a 20 year loan, her payments only go up $9 per month but she shaves 5 years and tens of thousands of dollars of interest over the course of the loan. A 15-year loan would pay even less interest but at a cost of increasing the mortgage payment by $321 each month.

Of course, every situation is different but hopefully, this can serve as a guideline to help you as you make your own decisions about refinancing.

The case against refinancing

Even though mortgage rates are at historic lows, refinancing is not right for everyone. Here are a few cases where it might not make sense to refinance, even if today’s interest rates are lower than the rate on your current mortgage:

For even more information about the pros and cons of refinancing, check out our list of 8 refinancing tips

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