Here’s an old rule of thumb you may have heard: You shouldn't refinance unless you can get at least 1% less on your interest rate. Except that’s not always true.
“The fact is that there are occasions where a reduction in rate of even a quarter of a percent can provide benefits,” says Joseph Parsons, a senior loan officer with PFS Funding in Dublin, Calif. who also runs The Mortgage Insider blog. Do the math and find your break-even point to see when you’ll be saving money, and match that with how long you plan to stay in the home.
(To find the break-even point in number months, take the total savings per month and divide it into the total closing cost amount. So if closing costs were $6,000 and you saved $200 a month, it would take 30 months before you broke even with those closing costs and began saving money.)
No comments:
Post a Comment