While we’ve been making lots of small financial choices these days - from what groceries to buy to where to purchase our gas to how much we should be paying for cable - we’ve also been considering some larger financial decisions that have a more dramatic impact on our wallet.
Should I refinance my mortgage?
If you’ve been considering refinancing, the low rates we’re seeing couldn’t have come at a more perfect time.
Historically, the rule of thumb is that refinancing is a good idea if you can reduce your interest rate by at least 2%. However, many lenders say 1% savings is enough of an incentive to take action.
Should I take out a personal loan?
If you need cash, and need it quickly, a personal loan could be a good option. Interest rates tend to be lower than those associated with credit card advances, however keep in mind the best rates are reserved for those with good credit. As an (another) FYI, personal loans can also sometimes come with origination fees, which can be anywhere from 1% to 6% of the total amount of your loan.
Should I raid my retirement account?
The CARES Act - the Coronavirus Aid, Relief, and Economic Security Act, which passed back in March - may make it more palatable to tap your retirement savings (Under the new rules, those who have been affected by the crisis are eligible to withdraw up to $100,000 from their qualified retirement accounts—without incurring the 10% penalty that usually accompanies early withdrawals.), but ideally, your money should ideally be compounding in a retirement account.
Pulling it out early to fix a short-term crisis could ultimately create longer-term problems.