When Should You Refinance Your Home Mortgage? | Refi Now or Wait?

Summary

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Episode Overview

Title: When Should You Refinance Your Home Mortgage? | Refi Now or Wait?
Podcast: Frugal Friends Podcast
Hosts: Jen Smith & Jill Sirianni
Date: October 21, 2025

In this episode, Jen and Jill break down everything you need to know about refinancing your home mortgage: what refinancing actually means, how timing and economic trends affect your decision, and—most importantly—how to calculate whether refinancing now, or waiting, will save you the most over the life of your loan. The hosts share personal experiences, practical math, and actionable steps, all in their trademark mix of clarity, humor, and realism. If you’ve bought a home in the last 2–3 years or are advising someone who has, this episode is a critical listen.

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Key Discussion Points & Insights

What is Refinancing and Why Consider It?

• Definition: Refinancing means taking out a new mortgage, ideally at a lower interest rate, to pay off your existing one. You can refinance multiple times as long as your credit and finances allow it. ([02:01])
• Purpose: The primary goal is to lower your interest rate, potentially saving thousands or tens of thousands of dollars over the loan’s lifetime.

Quote:

“A refinance is just getting a new home mortgage. … You can do as many home refinances as you want, as long as your credit allows.”
—Jen [02:01]

Economic Context: Understanding Rates

• Federal Funds Rate vs. Mortgage Rates: The mortgage rate doesn’t directly follow the Federal Funds Rate. Instead, it’s closely tied to the 10-year Treasury yield, but decisions by the Fed and related media coverage influence home buying behavior, which then moves mortgage rates. ([07:55])
• Upcoming Changes: Analysts expect mortgage refinance rates to drop by 0.25–0.5% by the end of 2025, potentially settling around 6–6.3%. However, these are predictions—not guarantees.

Quote:

“Mortgage rates are not tied to this [federal funds] rate…they’re actually more closely tied to the 10-year treasury yield…But what happens…is that makes it into the news, and that influences home-buying behavior, and home-buying behavior impacts mortgage rates.”
—Jen [07:55]

• Uncertainty Factor: Don’t trust anyone claiming to know what rates will be after January 2026—no one truly knows. ([12:13])

Should You Refinance? The Big Three of Saving

• Frugal Focus Areas: Housing, transportation, and food. Refinancing can impact housing costs more significantly than trimming minor daily expenses. ([14:07])
• Goal: The episode focuses on saving the most on overall interest paid across your mortgage, not just lowering your monthly payment for more spending money.

Practical Math — When is Refinancing Worth It?

The Break-Even Analysis ([19:21])

• What is it? Calculate how long it takes for your interest savings to outweigh the refinancing costs (usually around $2,400 in fees).
• Examples:
  • 7% to 6.5%: On a $329,000 loan, refi after 2 years to 6.5% saves $171/month; break-even in 14 months; $9,000 total saved over the loan.
  • 7% to 6%: Monthly payment drops more; break-even at 9 months; $46,000 total saved over the loan.

Quote:

“If you’ve got an offer of a 1% lower, that’s really worth it. This could really save you a lot of money.”
—Jill [26:56]

Closing Costs

• Best Practice: Pay closing costs out of pocket if possible; second best is rolling them into the loan (minor added cost); avoid “no-cost” refis as they typically hide costs in higher rates, which can cost tens of thousands over the life of the loan. ([21:02])
• Exception: Only consider no-cost refis if you expect to move or refinance again before the break-even point.

Timing: Refinance Now or Wait?

• Aim for at least 1% drop in interest rate for significant savings.
• Don’t wait indefinitely: Rates are dropping slowly; once you see a 1% reduction, it’s usually time to move. Waiting for “just a bit lower” could backfire if rates rise. ([33:33])

Quote:

“When you see 1%, don’t wait. The rates are moving down very slowly.”
—Jen [33:33]

Mortgage Terms: 30-Year vs. 20/25/15-Year ([28:04])

• Flexibility: Most people think 15 or 30-year are the only options, but you can often refinance into 20 or 25-year terms.
• Shorter Term, Lower Rate: The shorter the term, the lower the interest rate—and the bigger your total savings. Even if your payment isn’t much lower, the interest saved and equity buildup is considerable.

Cash-Out Refinance: Caution! ([30:00])

• Warning: Refinancing to access equity for debt pay-off can be risky if underlying spending issues aren’t addressed. Frequently, people who cash out for debt wind up back in debt—or worse.
• Alternative: If you must, a home equity loan is usually preferable to a cash-out refi.

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Notable Quotes & Memorable Moments

• On Waiting for Rate Drops:

  “No one has any idea. Nobody. And if they tell you they do, they are trying to scam you.”
  —Jen [11:19]

• On Cash-Out Refinances:

  “For me, these are red flags…People are going from a 3% interest rate on their home or a 4% and they're refinancing to an 8% interest rate willingly because they have so much consumer debt.”
  —Jen [29:10]

• On Family and Refinancing:

  “Here we are, thanks to sunk cost bias.”
  —Jen, describing how they became landlords not by design, but by following through on a failed plan out of inertia [43:18]

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Step-by-Step Action Plan for Listeners

1. Run Your Numbers ([31:46])

• Use AI tools (ChatGPT, Gemini, etc.) or your financial planner. Be specific: “Original loan amount, number of payments made, current rate, pre-approved refi rate.”
• Ask for your break-even point and total interest savings, both for the full loan term and your expected time in the house.

2. Shop Mortgage Rates ([05:03])

• Get quotes from multiple lenders. Try online aggregators AND your local credit union, which often have the best rates.

3. Aim for 1% Lower—But Don’t Chase Perfection ([26:56])

• “If you’ve got an offer a full percentage lower, go for it. Don’t wait endlessly for another tiny drop.”

4. Shorter Mortgage Terms = Bigger Savings ([28:04])

• Consider refinancing to a 25 or 20-year loan, or even 15, especially if you’ve owned your house more than two years.

5. Avoid “No-Cost Refis” Unless Short-Term ([21:02])

• Rolling closing costs into the loan is OK if cash is tight, but steer clear of “no-cost” (higher-rate) offers unless you’ll refinance again soon.

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Noteworthy Segment Timestamps

• Definition of refinancing & Jen’s personal rate story: [03:54]
• Mini Economics Lesson on rates: [07:11]
• The ‘Big Three’ of budget savings: [14:07]
• Break-even math for refinance: [19:21]
• Closing Cost strategies: [21:02]
• Mortgage Term options & savings: [28:04]
• Risks of cash-out refis: [30:00]
• Step-by-step “How to Calculate” with AI: [31:46]

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Listener Stories & Lightning Round

Katya from Las Vegas shares a Bill of the Week win
—Negotiating a thrift store price down from $25 to under $10, inspired by the show ([35:50])

“I mustered up some courage and I thought of you guys…and was able to get all of them for $9…”
—Katya

Lightning Round (Mortgage anecdotes):

• Jen describes how sunk cost bias led to buying and renting out a bigger house ([41:28])
• Jill recalls the confusion around “locking in” an interest rate ([43:32])

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Takeaways & Recommendations

• Do the math specific to your situation: Refinance if your new rate is at least 1% lower, especially if closing costs are manageable and you plan to stay past the break-even period.
• Shorter terms are almost always better in the long run.
• Refinancing isn’t a one-shot deal—if rates drop again in 18 months, you can refi again.
• Avoid borrowing against your home for debt payoff unless you address the underlying spending issues.
• Refinancing is easier administratively than a full mortgage—don’t let the process scare you.

Final advice:

“If you can close a mortgage, you can close a refinance. Actually, the refinance is a lot easier than the mortgage.”
—Jen [47:19]

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Resources & Further Learning

• Use online calculators, AI, or your financial planner to model your specific scenario.
• Check your local credit union for the best refinance rates.
• For listeners who appreciate Jen & Jill’s approach, their book “Buy What You Love Without Going Broke” offers more tools and resources.

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[For more, subscribe to Frugal Friends or leave your own financial story at frugalfriendspodcast.com]

Transcript

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[Jill]

And live a richer life. Here are your hosts, Jen and Jill.

[Jen]

Hey, Frugal Friends, I'm Jen.

[Jill]

I'm Jill.

[Jen]

And if you have been watching the news at all, you might be thinking, is it a good time to refinance your home mortgage? Even if it might not be a good time for you, maybe for someone you know who's purchased in the last two to three years, if that is you, if you have purchased a home in the last two to three years and you have a home mortgage, this video is for you. And if you know anyone like that, share this video with them because it is a cannot miss.

[Jill]

It could literally save you tens of thousands of dollars.

[Jen]

Yes, we have dug into the news, we have cut through the speculation and we have run the numbers to help you figure out if it is time for you to refinance your home mortgage. So we're going to go through all of that, what a home refinance is, and a teeny tiny economics lesson so that you can understand because nobody can tell you point blank unless you're it's your financial planner or your broker if it's a right time to refinance. So this will be a really good episode. So Jill and I have both had experience with mortgages and refinances and so we wanted to walk you through briefly what is a home refinance versus a mortgage. So a refinance is just getting a new home mortgage. So you are trading, you are going through a bank and taking out a new mortgage, ideally at a lower rate to pay off the old one at a higher Rate. And that's all it is. You can do as many home refinances as you want, as long as your credit allows, as you have the capacity for. You don't have to just refinance once. You can refinance over and over. And that's something we'll see in the next few years, as mortgage rates start to drop, is that people will. Who have had this at the peak 7% interest rates will start refinancing every 18 months until they get, you know, until they can't. And so if that's you, that may be something that you want to do. But when should you get your first refinance?

[Jill]

Well, and I think I want to mention the reason that people would do this is to primarily get that lower interest rate, knowing that over the life of a loan, you can save thousands, if not tens of thousands of dollars on getting a lower interest rate. So if you were a person who bought your home at a higher interest rate and now you start to see rates are dropping, that's when someone might be considering, can I hop in on this lower interest rate even? I did purchase my home a couple years ago at a higher one.

[Jen]

Yeah.

[Jill]

So you've done this. You've refinanced.

[Jen]

I refinanced when the rates were super low. Like in the twos. I think we got 2.8.

[Jill]

What did you purchase at? What was the initial.

[Jen]

I think we purchased at four and a half.

[Jill]

Okay.

[Jen]

And so our second home, we actually. This is like, crazy, but. So rates started increasing. I know this date, March 17, 2022, is when mortgage rates started increasing. And we locked in our mortgage rate, or it's when they went on there. Like, that's the technical.

[Jill]

Right.

[Jen]

They. We locked in our rate for our other home, March 16, because when you get a mortgage, you should go through and kind of get rate quotes at a lot of different mortgage companies. And there are sites that will help you do that, like, all in one place. You can put in your info, and they will spit out, like, 20 mortgage companies that you know could be the right fit for you. So I. I locked in at the. The lowest one, and then I called them the next day to see if I could negotiate even lower, because that's something that you can also do. And the person was basically like, take this rate. You will never find this rate again. And I was like, oh, okay, great. Yeah. So we locked in at four and a half in 2022 for the home that we're living in now. And we still have that one. We refinanced from our 30 year mortgage at four and a half to a 15 year mortgage at 2.8. Because the shorter the term that you refinance into, the lower your rate is going to be. And we'll get into that later. But I think the biggest question that everyone has on their mind is do I refinance now or do I wait? Because in the news we've been hearing there's a couple more rate cuts coming before the end of 2025. And so do I do it now? Do I wait? And here is how we're going to start off this conversation with a mini economics lesson. I hope somebody can do like glitter. We don't pay a lot for video editing, so we'll see how that turns out. A mini economics lesson. So the rates that you're hearing about in the media is called the federal funds rate. And that is what our tiny economics lesson is going to be on today is the federal funds rate.

[Jill]

Stick with us, we'll try and make it fun.

[Jen]

Yes.

[Jill]

So essentially the federal funds rate is the interest rate that banks use when lending money overnight to one another. So banks are required to have a minimum reserve, an amount of money that they keep at their bank end of day. And sometimes they don't have that amount of money so they need to borrow from other banks. And the federal funds rate is that range of interest rates in which they lend this money to one another so that they don't lose your money and so that you don't go broke because they don't have enough money in their reserves, in their accounts at the end of each day.

[Jen]

So mortgage rates are not tied to this rate. Actually, it's a common misconception. It's a misconception that I had because it seems like whenever anybody talks about the federal funds rate, then mortgage rates do something. Mortgage rates are actually more closely tied to the 10 year treasury yield, which you don't need to know about for the purposes of this video. But what happens with the federal funds rate is when the Fed, their committee of people who, you know, decide when things are going to rise and fall, when they get together and that makes it into the news that influences buying behavior, home buying behavior, and home buying behavior is what impacts mortgage rates. And that's why you saw mortgage rates actually dipped a little ahead of the last federal funds rate dip, which was in September. And from that meeting we can speculate pretty accurately. There is probably going to be two more rate cuts this year. And so that could be as soon as I think October 28th, 29th. October 29th is when we would see the next one. And then December 10th is when we would see the next one. So mortgage rates won't be tied to those dates, but you may see them shift as a result. Yeah.

[Jill]

So Laz, so how does it impact mortgages? Like you said, it doesn't that the federal funds rate is not tied to mortgage rates. That's more tied to short term loans. You might see that changing credit card rates or car buying rates. However, it does influence the environment in which mortgage rates move. It is more closely tied to the 10 year treasury bond yield. I know we're not super getting into that, but here's the correlation there. So when the Fed cuts rates, the federal funds rate, investors will often then buy Treasuries. That equals a little bit more safety or security because when rates drop, it's an indicator that inflation is going to go up. It's meant to stimulate the economy. And so investors are buying up Treasuries, which causes demand and then prices to increase, which pushes those yields down. Those bond yields, that 10 year U.S. treasury bond yield down. Jill Reynolds on I did because I really wanted to know what then why, why are we talking about the federal funds rate? They, they are indirectly connected. So I think you can talk about the federal funds rate, but you've got to kind of know if we're giving them an economics lesson how that impacts everything else around it. I think a full picture can be useful to us. Like who's all interacting here? What does it mean for me? Because when interest rates go down, that can mean a really good thing for people who want to refinance or people who want to buy homes. But it's not without other consequences on other ends. Right. That like we'll probably see inflation go up even more. That's just the ebb and flow of things. So we can be preparing ourselves on that end too.

[Jen]

Yeah, so. So with these rate cuts, we could see mortgage rates and refinance rates diploma maybe another half percent by the end of 2025. And even if you're watching this in 2026 or later, stick with us because all the information we're going to give is still going to be relevant for you to decide whether right now is the time to refinance your home or not. But I think we may be able to predict that, and this is all speculation prediction that we could see a little bit lower rate by the end of 2025. Beyond that, nobody has any idea. Nobody. And if they tell you they do, they are trying to scam you. But if anyone tells you anything beyond like January 2026, nobody has any idea.

[Jill]

Don't believe that.

[Jen]

Don't, don't, don't believe them. But analysts do say they expect mortgage refinance rates to fall by about a quarter to a half percent more by year end. So refinance rates could be around 6 to 6.3 by the end of the year. But like what Jill was talking about with inflation, that has a big impact on these rates. And so if inflation flares again, if something international happens or something unforeseen happens and inflation flares again, then mortgage rates might hold steady. They, you know, they may not drop. And so that's why this is, this is speculative. And the Fed can, yeah, even if the Fed does cut the rates short term, that doesn't have a one to one impact on what mortgage rates will definitely do. But it does seem likely people's expectations.

[Jill]

And speculations maybe do bear so much weight on what actually happens. Like more so than what the Fed is doing. If people are anticipating inflation, then, then that's going to bear weight on whether or not it shifts what mortgage rates are. So we can at, we can guess that by the end of 2025 they'll probably drop a little more just based on what's being said. But none of us truly know for.

[Jen]

Sure, which is hilarious to me because we're always saying personal finance is personal. It's not all about the numbers, it's about actions. And it is the same in the economy. If you really look at it like people can pretend that this is like a formula, but honestly it is very similar to personal finance.

[Jill]

Yeah. So the big question, should you refinance? And we want to remind everyone that we believe there are some major ways that you can save money. They call them the big three. We're not the only ones who talk about this. Housing, transportation, food. That if we are able to focus on these three main areas and ways to cut in those areas, that's going to mean the biggest savings for us. Rather than trying to nitpick and penny pinch and coupon clip, if we just focus on these main three things, we could save a lot of money. Of course, food decisions are happening daily. Car decisions are happening maybe every five to seven years. Home buying decisions are happening even less frequently maybe every five to 15 years. Some of us out there, you haven't made a home buying decision in 30 years, but that one is one of the biggest heavy hitters when it comes to these three that if we can make a good home buying purchase. We still want to make good transportation and food decisions, but they don't even matter quite as much if we can be saving a ton on our home. Because this is an area where we, we really can make, we are making hundreds of thousands of dollars worth of decisions. And so if we can make some of these choices that save us tens of thousands of dollars, that's huge for our personal finances. And so refinancing is one of those things that can do that. Of course we're going to kind of go into what some of that math might look like, but it should be a consideration.

[Jen]

Certainly.

[Jill]

If you do own a home, should you refinance? Let's figure it out. Because it is one of those big three.

[Jen]

Yeah. And so we'll be talking from the perspective that we love home refinancing as a way for you to save money overall on housing, which tends to be your biggest monthly expense. So if you're looking to refinance so that you can lower your monthly payment and have more money to spend every month, I think you could still get something out of this video. But it's this episode it's not targeted for that is how can we pay the least in our mortgage so that we can have more money to spend. We're going to talk about ways to lower interest and lower payment, but in the grand scheme of things, it will be with the goal to save on the overall interest payments of the life of a mortgage. When you're juggling work, family and everything else, it's easy to overlook protecting your financial future. But life insurance is one of the simplest ways to make sure that people you love are taken care of.

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[Jen]

So we are going to go into the theoretical math on a theoretical home purchase that was made in the last three years to kind of show you if you have a certain interest rate. And we're going to throw out numbers but you can kind of replace them with your own numbers. You know, we'll, we'll throw out what was typical two years ago is 7% interest rate. And so what if I'm seeing a six and a half, should I go for it? What if I'm seeing a six, should I wait for it to go even lower before I refinance? And so we're going to do the math and give you our recommendations on maybe when you should pull the trigger. Ultimately that's up to you, but when we might pull the trigger.

[Jill]

So the one of the things you want to consider is your break even point. So doing a break even analysis on doing a refinance and what that just means is how much are you going to need to pay in order to refinance? Because yes, it does cost money, typically around $2,400. So not a huge amount. But there fees involved from lender fees to third party fees and it all can add up to about $2,400. So that's something to keep in mind. That money is going to come out of your pocket. And so a break even analysis on some of the numbers that we were running on, you know, what was the median price range? So if you were to be doing a refinance on a loan of $329,000 at 7%, you, you were having a monthly payment of about $2,200 just for the payment and interest alone. And then if you were to refi after two years at six and a half percent, that's going to bring that monthly payment down to $2022. So that'd be $171 a month in savings compared to what you were paying if you refinanced after two years at 6%, so one whole percentage lower than what you had, that would equal 1,900 and a total savings of $275 a month. And so that break even point for the six and a half percent would be 14 months. And the break even point at the six percent interest rate would be nine months. So longer for the higher percentage, which I find interesting and lower for for the lower percentage.

[Jen]

So a note on closing costs. We do recommend paying closing costs out of pocket. It is the least expensive way, the way that saves you more money because you're not rolling in and paying interest on those closing costs. But if you cannot afford the 2,400 and that's the median range, that's the median number, then it is better to roll your closing costs into your refinance versus going with something people are calling a no cost refi. So no cost refi has no closing costs, and I put that in parentheses. Instead you will take out a higher interest rate and lenders will usually add 0.25 to 0.5 onto your, your refinance rate for doing a no cost refi. And you'll see when we break down like total life of loan savings how significant that is. But the best case scenario is paying closing costs up front. Next best is just rolling them into the loan because that's going to, I get, I think put maybe $11, you're going to pay maybe like 600 extra dollars over the life of your loan if you do that. But if you are doing a no cost refi, you could be paying tens of thousands. So the caveat to that would be if you plan to sell or refinance again before your calculated break even point. So whatever breakeven point you are calculating, if you are paying upfront or rolling in. So if you plan to refinance before that many months, then a no cost refi could be beneficial. So that's what we're looking at. And you can see with the half percentage point difference, you're saving an extra hundred dollars a month. And then even if you were to only get a half point off, a half a percentage point off, you're still breaking even in 14 months. So if you're wanting to refinance again in 18 months, then you can do that and you're still saving money. And we'll talk about mortgage terms a little later, but that's when we would start to get into like you would not for the purposes of this, after two years we're assuming a refinance into another 30 year mortgage. But that's something you'll want to look into if you plan to do multiple refinances. Because Getting back into 30 year after 30 year after 30 year will start to erode at those savings.

[Jill]

Yeah, the Math on the 6% versus 6.5% was the most mind boggling to me. And I think the main takeaway with that, something you mentioned before we started recording, is that you really want to aim for at least one percentage lower than what you're currently paying. A half percent can still be worth it, but it's quite different to go from a half percent to 1% even in the total interest savings over the life of the loan. And so the way that we had calculated these numbers is by looking at we had only had this mortgage for two years, then we decide to refinance. So here's what the new principle of that home is. And that's the $329,000 that we got. And then we're rolling that a new, we are essentially getting a new mortgage for another 30 years and that by the end of it, at a six and a half percent interest rate coming from a 7%, the total interest savings over the life of the loan is $9,000. If we were to run that same math on the 6% interest rate, the total interest savings over the life of the loan would be $46,000. And for me to try and explain to you why there is such a big difference between the $9,000 and the $46,000, I have no idea. I do not know this.

[Jen]

We know that most of your first couple years of payments are interest. We know this and we know that there is math. And we had the computer do the math for us. We didn't, we asked computer do this math very specifically. I am refinancing from a 30 year, I've made 24 payments, I'm refinancing into another 30 year. So we asked it very specifically and this is what it gave. And 9,000 is not nothing. Like if you hand me $9,000, I'm not going to be like, it's not $46,000. Get it away from me. $9,000 is significant. It's over the life of the loan though. So you don't again see much of that savings right up front. You're mostly seeing that $171 a month. But I think the big point that we want to make is that once you get to 1%, then the savings are significant. And I don't think it makes sense to wait more to see if the rates like go down a little bit more because they could go up at that point. And you have to reconcile with yourself and say, okay, will I be mad if the rate, if I refinance and the rates go down more or will I be happy I'm saving $46,000 or whatever? Will I be more mad there or will I be more mad if rates go back up and then I'm only getting like a 0.75% rate?

[Jill]

Yeah, exactly. And I think remembering that you're not, this is not a once and done thing. There is opportunity to refinance however many times you want. There's going to be a point where like you shouldn't be doing it every year. But the thing that is my biggest takeaway is if you've got an offer of a 1% lower, that's real worth it. Yeah, this could really save you a lot of money. And then compounding that by the potential of rolling it into a shorter amount of time for that loan as well, that that's absolutely going to save you a ton of money in interest no matter what your interest rate is. If you're doing a 20 year versus a 30 year. We again just said we're getting another 30 year mortgage because we were basing this off of refinancing after only two years. But if you've owned the home for more than that, then we're going to recommend trying to go for a mortgage that is within that 20 to 25 year. If you can swing 15 year, even better. So that's another one of those factors that you want to consider and run the math on.

[Jen]

Yeah, we think 15 and 30 are the only options. But refinancing, you also have 25 and 20. And so yeah, if you've owned your home for three or more years, you might not be getting a monthly saving by going down to a 25 or a 20, but you're going to get a lower interest rate because the shorter your term, the lower the interest rates. And that could where you were at maybe a portion 0.75. If you went with a 30 year mortgage, you could get all the way down to a one if you go with one of those shorter terms. So we're going to highly recommend that. And maybe you're not seeing the monthly savings, but you're going to see the overall savings. And that's really what we are looking at, even if you don't plan on being in your home forever, it's not your forever home. If you're going to be there for a little while, if you're going to be there past the break even point, then it's going to save you money in that you're going to be paying, making more equity payments sooner so you'll have more equity in the home when it does come time to sell. So you're saving money, you're building equity faster and it's just like a good overall strategy. So many people choose, especially if they don't think they're going to be in the home long term. Maybe something like a cash out refi or people who have debt will use these cash out refis to pay off their debt. And for me these are red flags. There are literally, I think all the refinances that have happened in the last three years. I've heard people going from like a 3% interest rate on their home or a 4% and they're refinancing to an 8% interest rate willingly because they have so much consumer debt. That's like credit card. Yeah.

[Jill]

But then you're just taking on more debt.

[Jen]

Yeah. So you're paying off your higher interest debt at a, at a lower interest but then you're putting your home at risk and you haven't treated any of the theoretical symptoms and root causes that got you there. So we see all the time, we hear stories of I paid off all my debt with a home equity loan or a home equity line of credit and I racked it all up again and more. That happens so frequently. Everybody probably knows somebody who has done that. So that's why I'm so wary of cash out refinances. Again, we don't recommend using refinances to have more money to spend or to have more money to pay off debt. You could, you are far, and I don't like this either, but you are far better off using a home equity loan if you can, to do stuff like that than to do a refinance. And some brokers might come at me in the comments. I'm not a broker, like I'm not a mortgage expert but I have heard a lot of debt payoff stories and from the stories I have heard, that is the route that I would take.

[Jill]

Well, I mean I could see you being able to have more cash flow to pay down debt in a refinance. Like if over the life of the loan you're saving $46,000, that's money that could be put towards debt payoff. So in that way it could help but not necessarily like what you're saying for the cash out or so I can have just more money to spend. But the bigger picture, we want to go from high interest rates to low interest rates. It's not the other way around.

[Jen]

Yeah. So wrapping it all up, schedule in an afternoon in December if you're watching this when it comes out or just schedule in an afternoon whenever you're watching this to do the math and you can ask ChatGPT or Gemini or whatever AI you use and plug in your specific numbers and it will do the math. So like say my loan is currently at this, it was originally at this. I have made this many payments and get specific like don't just say I've made two years of payments but may I've made like 26 months of payments, 28 months of payments and this is my interest rate. And go get pre approved for some refinance rates and like say this is what I've been pre approved for. What is my break even point? If I were to refinance my mortgage at this rate, how much do I save over the life of the loan? How? And if you don't plan on being there forever, how much would my total savings be if I am only in my house for the next five, eight, ten years, however long you plan to be there, ask it specifically and it will give you more specific answers. So don't just ask broadly or if you have a financial planner, if you have a CFP certified financial planner, ask them. This is a perfect time to call them up because this is their job is to help you with these decisions. Yeah.

[Jill]

So look for a percentage lower. Try and take a shorter term on the mortgage when you refinance and do the math on your specific.

[Jen]

And when you see 1%, don't wait. The, the rates are moving down very slowly. This September rate drop was the first rate drop we've seen in nine months. And then before that I think it had been, it had been like two years since a rate drop or something crazy like that. So rates are dropping slowly. We don't know when we'll get more. So don't wait in anticipation unless you're like a fortune teller and you know the future.

[Jill]

Speaking of knowing the future, I know what I want my current future to be.

[Jen]

Oh, is it the bill of the week?

[Katya]

This is the week.

[Jen]

That's right. It's time for the best minute of your entire week. Maybe a baby was Born and his name is William.

[Jill]

Maybe you paid off your mortgage, maybe.

[Jen]

Your car died and you're happy to not have to pay that bill anymore. Duck Bills, Buffalo Bills, Bill Clinton. This is the Bill of the Week.

[Katya]

Hi, Jen and Jill. My name is Katya. I'm from Las Vegas. I've been listening to you guys for a few months and I want to share my little bit of the week that just happened yesterday. I went to a thrift store and I saw a set of pots that I fell in love with. Automatically had these really amazing open closed valve lids. Only thing was, I could tell they were very pre loved, very scratched, and they were individually priced, adding up over $25 for the whole set. I was talking to one of my friends at the time and they told me that I should see if I could get an extra discount on them. Because although it's a thrift store, they were really, really used. So I mustered up some courage and I thought of you guys and I worked my way up to the front. Was able to speak with the supervisor and he agreed with me and was able to mark them down to where I'd only pay for basically the largest pot. So $11 for all three of them with the lids. And I had an extra 20% off coupon that day. So I used that and got all of them for $9 and some change. Oh my goodness. I'm so ecstatic. I have no problem having a couple items with a little extra character than most and super excited to be able to add these to my first home when I move out. Thank you guys so, so much for all of your tips and tricks. Know that some of us are actually putting them to use and getting good results. Have a great day.

[Jill]

Oh my gosh.

[Jen]

Katya. Yes.

[Jill]

This is so fun. I am first of all, with you on really liking pots and ceramics and just fun little things throughout the home. I am envisioning these being so cool. But the fact that you decided to negotiate initiate and it worked. It is so thrilling when we try something and then we realize I was allowed to do that. And the worst thing that would have happened would be they tell me no and then I make my own spending decision. And the best thing is they tell you yes. And you went from possibly having spent 25 on these to only spending $9 on them. And that's just a win.

[Jen]

Yes. Always ask for the discount in places where it is appropriate. And the thrift store is one of those places where it is appropriate. And so I'm so glad you mustered up the courage and asked nicely and got got the deal you wanted.

[Jill]

I know how wonderful and I hope that these are just such beautiful things that you put in your home and carry with you so that so fun. If you all are listening, have a bill that you want to share about negotiating a bill or a bill you don't mind paying or your name is Bill. We want to hear from you. Frugalfriendspodcast.com Bill, do you think you could.

[Jen]

Name all of your financial accounts right now? Like every 401k investment savings account, even that random HSA from your old job?

[Jill]

Honestly, most people can't. And that's where Monarch Money comes in. It's an all in one personal finance tool that pulls your entire financial life into one clean dashboard on your phone or laptop.

[Jen]

Yeah, that's what sold me. I started using Monarch and within minutes I could see everything. Our checking, savings, investments, credit cards all in one place. It's so much easier than hopping between apps or spreadsheets. And now I can actually understand our full financial picture at a glance.

[Jill]

Monarch really does the heavy lifting. Linking accounts in minutes, categorizing your spending, showing smart visuals of where money's going, and even letting you share a dashboard with your partner. Don't let financial opportunities slip through the cracks. Use code frugalonarchmoney.com for 50% off your first year. That's half off your first [e-mail] with code FRUGAL.

[Jen]

I think we're in for a tough couple of years.

[Jill]

There's no sugarcoating it. I'm Phil Buchanan, the president of the center for Effective Philanthropy. My co host, Grace Nicolette and I.

[Jen]

Are excited to bring you a new season of Giving Done Right the show.

[Jill]

Exploring what it takes to be an effective donor in this time of unprecedented challenge. This season, we're excited to bring you conversations that will help you navigate the current difficult context for nonprofits and donors alike. A new season begins on September 4th, so be sure to subscribe wherever you get your podcasts. And now it's time for the lightning round.

[Jen]

All right, so I put down mortgage or refinance stories and I don't have the. The biggest story I have is literally getting my last mortgage on March 16th.

[Jill]

And that's wild.

[Jen]

Of 2022 we had. And maybe so this is. Maybe that's the culmination of a, of a sad story that led to something good, I guess. But we had been wanting to buy a house for my mom, like a rental property that my mom could live in that was initially why we wanted the second property. And so we had gone through a hard money lender, got pre approved. So what hard money is, is that you wouldn't necessarily have a mortgage. You are working through a company that is essentially paying cash for the home, higher interest rate, but it looks more appealing to sellers because they're getting cash and they're not working with a traditional bank. So it can be a faster close, it can be a really good thing to have on investment properties. And we were dealing with so many at the height of early 2022, so many investors, hedge funds, companies that just like had literal cash in the bank, could do three day close, no inspection, were just buying houses up and didn't care what condition they were in. And so every house we were trying to get, even though we had hard money, we were just getting outbid, like more money, faster close, all of that. And so that's why we had to like rethink our strategy. And I don't know why we just didn't like be like, okay, it's not going to work out. We just, you know, it was a good idea but it didn't work out.

[Jill]

Sunk cost bias.

[Jen]

Sunk cost bias. That's what happened. That's exactly what happened, you guys. Because we were just like, okay, we're in it, now, we're going. And so then we looked at bigger homes that investors weren't looking at and that's how we ended up so that we could either kind of like subdivide it to make like a multifamily property. And, and I was like, I have no intention of having my mom live with us on my property, but here we go. And we ended up getting this five bedroom, three bath home that needed 100% renovation. And then we, yeah, we got it and we. I was pre approved, locked in rates and that is, I don't remember what order it went in, but it was all a blur.

[Jill]

And now your mom is not living with you?

[Jen]

No.

[Jill]

The midterm rental in the back.

[Jen]

Yeah. So now we have our old house as a long term rental. So that's our investment property. It's like our first home was our investment property and that we got at a good price, at a good rate. And now this one is our more expensive home, but we subsidize it. Subsidize it by renting out the back. And it was built on, it was originally probably like a 2:1 or something. It was a 2:1 originally. And then they built out the garage and then they added something in the back. So it was really easy to just build the wall. Short wall, really, to wall off that back. And now it has its own entrance and. Yeah. And that's how we're able to afford to live there.

[Jill]

It's so good now. And you have done a lot to it to make it look the way that it looks now.

[Jen]

Yeah, but we are the reluctant landlords. That's not why we got into this. And here we are, thanks to sunk cost. Buy it.

[Jill]

I have never refinanced, but I've bought a home, obviously, and sold the home. But I do remember the interest rate because we were on the phone with the lender, and they were talking to us about interest rates. And I just thought. I didn't know how volatile interest rates were. I just thought, like, here's the rate that you're getting. I just didn't know too much about it. And I remember her offering this interest rate and saying, okay, do you want to lock it in? And I'm like, I don't know what that means. Is there a lever we pull? She just kept using the term lock it in. And that just kind of stands out to me as a core memory in the home buying process. And I'm like, what does that mean on your end?

[Jen]

Lock in?

[Jill]

Oh, it just means, like, I'm gonna write it down. Yeah, write it down. Like, pull the lever, close the hatch. I. I don't know. Sounds good. What.

[Jen]

What are our.

[Jill]

And she's like, well, you know, if you wait, they can go up. They, of course, could go down. And it all felt so. I'm like, well, this is a good rate, right? It was 3.125. Like, I'll take it. And then it was maybe like a week later, I saw that our rate was like, 3.2. And I'm like, no, it's not, because I locked it in. I'm like, didn't we lock it in? We had a whole conversation about locking it in, what locking it in meant. And so I call them up, and I'm like, what's with this rate? And she said, well, you know, this is what you're getting for today. I'm like, no, we had a whole conversation the other day. You literally use the term lock it in. And I said, yeah, lock it in. Like, this wouldn't stand out to me if we hadn't have done it, you know? And I'm thinking, okay, well, if we didn't lock it in, then there's no way we can go back to that number. There was a way I'm like, no, we totally did do this. And I think I was even able to find an email about it. And so they're like, oh, okay, we'll give you that rate.

[Jen]

She wrote it down, but she lost the paper.

[Jill]

And that was what was so confusing to me is like they say you can't get a lower rate, but you actually can. Now you can buy down your rate. So it's all.

[Jen]

Yeah, a mess.

[Jill]

Anyhow, we ended up with 3.125.

[Jen]

According to consumerfinance.com.gov, a lock in or rate lock on a mortgage loan means that your interest rate won't change between the offer and closing as long as you close within the Spanish specified time frame and there are no changes to your application. Yeah. So that is the lock. It it most mostly locks the mortgage company, not you. So fun fact, many finance I will say so when we were going to refinance, we chose to refinance with our credit union. We were already members, but it's very easy to become a member of a credit union. And credit unions do typically offer lower rates. The reason we didn't take out mortgages with our credit union is because they take so long to close. Like, it is a weird, I don't know why it's very hard to close a mortgage with a credit union. At least our credit union refinancing though, was super simple. So check credit unions, they definitely have typically have more advantageous rates than banks. And that's what we saw. Even after looking at refinance rates on the Internet, we ended up going with our credit union and we've been very happy.

[Jill]

Good word.

[Jen]

Yeah.

[Jill]

Well done.

[Jen]

Yeah. Thank you for tuning in to this episode. Let us know in the comments if you're going to be refinancing or you're sharing with a friend who you think should refinance. Because not everybody refinancing can sound scary. Like you just, you don't, you know, your, your lender or your real estate agent can be like, oh, you can refinance later. But then it can be like overwhelming. But it is not an overwhelming process. If you can close a mortgage, you can close a refinance. And actually the refinance is a lot easier than the mortgage. So please, please let us know in the comments if this helped or if you have any other questions. If we don't know it, we can probably push it on to one of our friends that does. And if you haven't left a rating or review on the show, we would love for you to do that either on Apple, Spotify. Here on YouTube, hitting the subscribe button is so helpful. Half of you watching this are not subscribed and we put out helpful content like this twice a week. So it behooves you and your bank account and your net worth to just be subscribed so that you can see if something you like comes up.

[Jill]

Just do it.

[Jen]

Just why not just do it. And if you've purchased our book or read it from the library, buy what you love without going broke. We would also love if you'd leave a review on Amazon for that like Jessica did. Five stars. It's titled Much Deeper Than Just A Discussion of Money. I've been a fan of the podcast for a couple years and was excited to finally get a hold of this book. It's got such great ideas and really broadens the discussion of finances. It really meets you where you are and allows you to take a shame free look at how your life currently stands, where you want it to be, and how your relationships to money may be influencing that dividend. And of course, it was such a fun read. I loved the infusion of anecdotes from both Jen and Jill throughout the book. Looking forward to doing a deeper dive with the free tools they've created to accompany the book. Ooh, thanks Jessica.

[Jill]

What a kind review. And yes, when you buy the book, you also get a plethora of resources from the library.

[Jen]

Get it from the library, get it.

[Jill]

From the library, still get the free resources and then review it. Especially if you got it from the library. Do us a solid and review it. And thank you all for listening to the show again. Please review the show. Please subscribe to YouTube. Please leave a comment Are you tired of us asking?

[Jen]

Just do it.

[Jill]

We will stop asking when every single one of you have done it. That's our promise.

[Jen]

See you next time. Bye. Frugal Friends is produced by Eric Sirianni.

[Jill]

Jen, do you think you'll ever buy a home again?

[Jen]

Not if I can help it. God, not if I can help it. We met a girl named Courtney in Portland and she lives in St. Pete and she is a real estate investor with a mentor here. And I was like, I really like her, but I don't want to know anything about what she does because I don't want to own any more properties.

[Jill]

I feel like being friends with her and hearing what she talks about will just automatically lead you.

[Jen]

People you spend time with do impact what you do with your money. It's a proven fact and I don't want to do that.

[Jill]

Sorry, I can't be friends with you because I don't want you to influence me to buy more friends.

[Jen]

I said I didn't want to. I didn't want to hear about her business at all.

[Jill]

Don't tell me about what you do because I can't be trusted to not buy more homes.

[Jen]

I don't want to.

[Jill]

You're going to make it sound too good.

[Jen]

No, I'm. I'm. Yeah, I'm out of that game. I'm tired.

[Jill]

So do you think you would be more likely to sell off one of your properties than to buy a different one?

[Jen]

That's the goal.

[Jill]

Okay.

[Jen]

Yeah. Yeah, yeah. That is the goal. I think we're. We're very happy with two. Our ultimate goal is just to raise our income so that we can stop renting out the back of this house.

[Katya]

House.

[Jen]

So that is the ultimate goal.

[Jill]

And then what would you do with the back of the house?

[Jen]

I don't know. Invite friends over to stay.

[Jill]

Oh, yeah. Nice.

[Jen]

Yeah. Maybe, like, I don't know, use it as an office. Move in. I would Move in.

[Jill]

To your own home?

[Jen]

To the back of my own home. Mommy needs to leave. So Mommy needs some time away.

[Jill]

I'm right here.

[Jen]

But, yeah, no, I'm not here. I'm not here, but in reality, I am in the back of the house. Good point. But I'm not here.

[Jill]

All right.