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Bowl Leader
Community Builder
I’d like to get off this island now.
Good idea to buy some more AAPL right now?
Don’t make me go back to the office… 😩😩😩
Bowl Leader
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Anonymous User
Coach
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5.x ? Or 5 flat?
It’s a simple math problem, really. Refinancing will cost $x, which will save you $y per month by lowering your monthly payment amount.
$x / $y = the number of months before your savings becomes more than your refi cost.
I think rates might come down a little bit more, but if the refi cost isn’t too high, I’d still probably pull the trigger now if that break even crossover time is less than 2 years.
I agree that rates may come down a bit more, so I am waiting before a refi.
Coach
I generally have only done no-cost, no-fee refis. If you pay points and fees and interest rates go down in a year it will be a waste. That is also the best way to compare rate. At no cost no fee, same term, if you can get more than 50 bps, I would strongly consider taking it. I disagree with some of the other commenters on term. The 30 year fixed relatively low rate mortgage in the US is a feature supported by GSE purchases of these that many other places don’t have. You can always choose to pay down more principal - lump sum or over time, but having the optionality to make lower payments is valuable. The fact that when you refi it re-amortizes over a new 30 years is a feature not a bug and over time can greatly improve cash flow. You then have the optionality to do what you want with that cash - invest it, pay down principal, booze and gambling (don’t do that).
Whos offering you 5%?
Would want the name if they we’re offering 5 lol
Not seeing the 30 year rate be close to a 5 handle, need the new loan term and principal amount to answer the question.
Check on options to refi onto a 15-year loan (give how much you have paid down). The interest rate is usually even lower.
Would do it. Your break even is probs less than 2 years, assuming not buying the points.
Mentor
Predicting mortgage rates is the same as predicting the market, (aside from rare funding distortions) no one knows.
That’s why the rule of thumb would be to refinance if the payback period to recoup refinancing fees is under ~ 2 years.
I bought in January at 7.375%. I’m waiting until I can get a 20 year and keep my monthly expenses the same. I don’t care about getting extra money each month. I want to decrease the rate and term.
Yeah same.
Get a mortgage broker - they should be able to get you a zero cost refi into that interest rate. Only downside is that your 30 year clock restarts, but not an issue as you’ll either have paid off early or shifted to another home in that period
I refinanced twice in 2020 and I saved 0.5 percent each time and it was worth it. I think I broke even within 3 months the first time and 2 months the second time. After that I saved $100 a month with each refinance. That adds up quickly. What I did was used Zillow to find the lowest mortgage rates and called the lowest ones. I estimated closing costs as well as got a credit towards closing which reduces the time to break even. You can use payment calculators to see the savings per month. I would monitor to see when rates went down a little that morning so I could time it as best as possible. I sold that house last year but still had almost 4 years of saving $200 a month. That’s essentially free money so take it.
They would advise you not to refinance. No benefit and won't yield any significant value to you, considering you have to pay a down payment and other costs associated with refinancing. If you are going from 6 to say 4, then it is work it then
Are you going to put a ton of cash towards the principal? You do know reducing your payments bc of lower interest rates restarts the payment clock, and there’s no true benefit from an economic standpoint.
Even buying points can be beneficial if you stay in the home past the break even point. Plus, you might be able to get a shorter loan length.
I agree with EY 1 above.I would speak with a mortgage broker and see what they have to say. I don't know that I would want to refinance in this economy.