How To Refinance and Break Even

by John
(Tucson, AZ)

Regarding How To Refinance and Break Even: I need refinancing advice. My refinance was just 6 months ago into a 30 year fixed rate mortgage at 6.75%. I'm curious about the break-even point in refinancing. What is the payback period?

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How much should I expect to pay in closing fees? Should these fees be rolled into the new loan?

What is the best way to achieve a low-cost refinance of a 30 year fixed loan? Does it make sense to refinance?

I have heard that it should be less than three years to recoup the closing costs from your new loan but can this be accelerated given the competitive lending climate currently?

I want the best way to achieve a low-cost refinance of a 30 year fixed loan. With the interest rates dropping across the board, I am curious as to whether or not it makes sense for me to refinance at this point.

Kate Answers: How To Refinance and Break Even

Dear John, I know how confusing it can be to compare mortgage interest rates, trying to save money. Good news! I know the answers. Here is my best refinancing advice.

A simple break even formula is to divide estimated non-recurring closing costs by the proposed amount your payment will drop due to the refinance. Then divide that figure by 12 to calculate the number of years it would take to break even.

But don't stop there! I want to make you an expert refinance shopper.

Much more important than a simple break even calculation is discovering how to compare mortgage interest rates. That's because the lowest mortgage rate is not always your best deal.

For the most profitable refinance, also learn how to reduce your mortgage closing costs.

But the biggest question is why do want to refinance? Check out Real Reasons People Refinance to find out why it is your opinion that really matters.

Good Luck and Happy Refinancing,

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