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The Break-even Rule on When to Refinance. Another rule of thumb on when to refinance claims that you should break even. If the money you save in future interest costs equals the money you spend in closing costs, then refinancing makes sense. In truth, you should only pursue a refi when you exceed the break-even point.
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If you’re considering refinancing your mortgage, you may have searched for the "refinance rule of thumb" to help you make your decision. Of course, there isn’t a single refinance rule of thumb. One popular one is that you should only refinance if your new interest rate will be two percentage points lower than your current mortgage rate.
So brush off the Cheetos dust and pick up your mortgage – it’s time to save some. online to reduce the paper load. Here’s an old rule of thumb you may have heard: You shouldn’t refinance unless you.
The traditional rule of thumb (which you should use with sparingly) for figuring out when to refinance is a basic breakeven analysis. This process allows you to figure out how long it will take to recuperate the closing costs you’ll have to pay to refinance.
The old rule of thumb was to refinance only if you could better. You have enough equity in your home so that you can refinance into an 80 percent conforming mortgage ($342,000 multiplied by .80.
There is a cost to refinance your mortgage loan. Closing costs on a refinance can be as high as the original mortgage. tips to getting a better deal. The 2% rule is an old rule-of-thumb for deciding whether or not to refinance your mortgage. The reality is, it’s not quite that simple, and never has been.
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When and How to Refinance a Mortgage – Mortgage Professor – Many loan officers use this rule of thumb, which completely ignores how rapidly you pay off the new loan as opposed to the old one. Borrowers following this rule would never refinance into a shorter term loan because of the increase in payment, although the total benefit including the pay-down of the loan balance is substantially greater on refinancing into a 15-year loan, as indicated above.
Let Summit Credit Union Mortgage Loan officers (mlo) teach you about the. A good rule of thumb is that it can make sense to refinance if rates are lower than.