To Refinance or Not?

by | Dec 18, 2009 | How to Guides, Uncategorized

Rates are fantastic, prices have stabalized and many folks are planning on staying in their current home longer. So the question is should I refinance or not?

Reasons to Refi:
1. Lower rate
2. Change from ARM to fixed rate
3. Cash out
4. Divorce or dissolution of a business partnership

Reasons to not Refi:
1. Moving soon
2. Cost outweighs savings

To find out how long it will take to recapture the cost of a refinance just take the total cost and divide it by the monthly savings = number of months to break even. After you break even your net savings begin every month after that.

1 Comment

  1. James Adair

    Great post! Some additional scenarios that i’m seeing right now are folks wanting to refinance out of an “exotic” loan like an interest only or option ARM. In these cases its very often that the cash flow has negative impact (meaning your payment goes higher), but the total cost of financing is dramatically lowered over time. So sometimes just dividing your refi costs by the monthly savings will not tell the whole story.

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