When is it worth it to refinance?
Interest rates are up a bit from their historically low levels. But the rates are still so low that you might be considering whether this is the right time to refinance.
Before you make a decision, you should ask yourself how long you plan to remain in your home. Answering this question can help you decide if the effort is worth it.
Expect to pay thousands of dollars in closing costs when you refinance. Will the monthly savings offset the one-time cost?
If you refi a $200,000 home and are charged $3,000 in fees, you need to be able to recoup that cost in a lower payment.
On a $200,000 mortgage, a 1% interest rate reduction can save you approximately $120 per month.
Under that scenario, if you plan to stay an additional 20 years in your home, you stand to save significantly by refinancing. Not so, if you intend to sell your home in five years.
You can find the lowest rates available using our extensive database of mortgage rates from scores of lenders.
And use our refinancing calculator to help evaluate any offer.
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