Piggy bank, percent sign indicating Interest rate and small model of a house.

Making the Best of Low Interest Rates

by Mary E. McCraw, CFP®

In 2012 and 2016, I wrote about refinancing as we were experiencing very low mortgage rates. After bumping higher the last two years, we are happy to see that mortgage rates are once again low. If you missed it a few years ago, this is a reminder to consider refinancing your mortgage now to take advantage. According to a local lender, current mortgage rates range from 3% to 3.375% for 15-year loans and 3.5% to 4% for 30-year loans (rates subject to change daily). On the flip side, it is challenging to find a decent interest rate on a savings account. Below are some tips to minimize interest on loans and maximize interest on bank accounts.


It is important to know both the upfront costs involved in the loan and the rate for a new loan. You can then calculate how long it would take to recoup those upfront costs. It will vary based on your situation and how long you plan to stay in your home whether or not the refinance makes sense. If you have a home equity line of credit with a variable rate, consider locking that in at a low fixed rate. This is especially important if it will take several years to pay off.

Refinancing can also be helpful to shorten the life of your mortgage. We strongly recommend having your mortgage paid off prior to retirement. If you are planning to retire in 17 years and have 25 years remaining on your mortgage, now would be an excellent time to refinance to a 15-year mortgage. If your timeframe is shorter, a 10-year mortgage is an option. We recommend a 30-year mortgage for younger clients who need the additional cash flow for other goals and have time to pay it off.

We know sometimes clients put off a refinance due to the hassle factor of getting it done. In our experience using local lenders, refinancing can be a painless process. The lenders that have worked with our clients are available to meet face to face (or do everything remotely if preferred) and work to minimize that hassle factor.

Savings Accounts

As for interest rates on savings accounts, the highest we’ve consistently seen are the online only banks (Ally Bank, Capital One, etc.). Right now those savings accounts are paying around 2% interest with no fees or minimums. While you can’t visit a local branch, these accounts can be linked to local checking accounts with electronic money transfers to access cash. If you prefer a local bank, check around for savings accounts (or even checking accounts) that have high interest rates. If you bank locally, it never hurts to ask if there is an account available with a higher interest rate. Based on the current rate environment, we do not recommend locking up funds in CDs right now.

As always, we encourage you to contact us if you have any questions regarding your specific situation.


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