What is the best way to determine if it is a good time to refinance your mortgage?
Answers:
It's a comparison of a few different numbers.
(1) The cost of the refinancing. You can get this for free from a lender, or you can look at your previous mortgage for a ballpark figure of how much it will cost. Some banks do "no-cost refinancing" which costs you nothing, but doesn't get you the best possible rate.
(2) The difference in the interest rates *times* your mortgage amount. So if you're looking to lower your rate by 1.5%, for example, on a $300k mortgage, then this number is $4500. That's how much money you'll save per year.
(3) Now divide (1) by (2). That's how many years it'll take to "break-even", after which you'll make money on the decision to refinance. Typically I recommend that people should be fairly certain that they're not going to move for *twice* as long as this number -- because they only *break even* after (1)/(2) years, and you want to refinance only if you're reasonably sure that it'll be a financial advantage for you.
There are other smaller factors like your tax rate, your other itemized deductions, your investment retun on the money you would otherwise spend on the re-finance -- but there's smaller variables than the ones mentioned above.
Good luck,
Doug
When the numbers add up in your favour.
When you feel the interest is lower than the cost of your adjustable rate fluxuates up in better times.
Unless one is desperate and must have the funds ASAP, the current interest rate as compared to the original rate on your existing loan is by far the most determining factor.
Depends on how long you've had your current mortgage...what your goals are, are you an investor, do you wanna cash out, do you have equity, what can you afford...lots of factors involved.
If you wanna talk real numbers with a licenced professional hit me up, I'd be glad to help.
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