- Aug 8, 2010
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A good rule of thumb is that if interest rates are 1/2% to 5/8% lower than your current interest rate, it may be a good time to consider refinancing a home mortgage.
Good Rule of Thumb
I don't quite get refinancing (never done it), but isn't there a catch along the lines of you'll be starting at the "beginning" of the loan again, meaning you're going to be paying the interest part first?
Good Rule of Thumb
I don't quite get refinancing (never done it), but isn't there a catch along the lines of you'll be starting at the "beginning" of the loan again, meaning you're going to be paying the interest part first?
$800 a year or month? They say it is not worth it unless it is a full percentage point.
Yes. It resets your amortization tables which is why it's not always a good idea to refinance, you could wind up paying MORE even if your rate is lower. But being as OP's only a year in that pretty much negates that angle. If he was 10 years in on a 15 then absolutely don't refi.
$800 a year or month? They say it is not worth it unless it is a full percentage point.
Now. It can't get much lower.
Anyone telling you the amortization resets isn't entirely accurate. You can refi and some lenders will allow you to keep your current schedule. We refi'ed 1 year into a 30 year mortgage and kept the remaining # of payments the same.
I just refinanced by buddy that I sold a condo to in September down to 4.5 percent; from 5.375;. I paid all his fees and still made $7K on the deal.
Win-Win.
Basically anyone who is sitting in the 5+ range, with good credit and 20+ percent equity should think about refinancing.