I currently have a 30yr fixed home loan for 5.25%. When does it make sense to refinance?

Posted on July 03

Question: I currently have a 30yr fixed home loan for 5.25%. When does it make sense to refinance?

Answer:
If your refinance cost is $2,500, then, you can get 4.50% and you would save $3,500 for the 1st year on a $400,000 loan, but, only $450 on a $60,000 loan.

If you calculate the interest savings, then, compare that to how long you’ll be in the home; you’ll have an accurate answer.

One thought on “
I currently have a 30yr fixed home loan for 5.25%. When does it make sense to refinance?

  1. There are some points of concern you have left out. Do you have enough equity? Most people with 60 month loans are upside down in the loan to avoid this 15% down is the minimum. Many financial institutions will only finance a percentage of the blue book value (80 to 90 percent) That’s a very good rate and is it for a 48 month loan, a lot of teaser rates are for 18 or 24 months. Be very careful about the terms, there are many sub prime loans available with unique terms that favor the lender.

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