When should I refinance? #Refinance #realestate http://wp.me/p146tm-ah

Question:

What situation makes sense to refinance? How long will I have to own the home to make up the cost of the refinance?

Answer:

With mortgage rates near historic lows, many homeowners are considering the benefits of refinancing their current home loans.  So how do I tell if refinancing is the right option for me?  2 is the key factor that is used as a general rule of thumb in the mortgage industry.  2 being the number of percentage points you would need to save on the interest rate and 2 being the minimum number of years you would need to stay in the property afterwards to make the refinance worthwhile.  However, one can still see significant savings with even a smaller 1% decrease in interest rate which would make this an attractive option considering the time you plan on staying in this home.  Since one would incur additional closing costs with a refinance option (approximately 2.5% of the loan amount on average) one would need to analyze the monthly savings verse the expense to find a breakeven point.  This would indicate whether the refinance option really works for your particular situation.

This answer was provided by Jeff Edwards of DHI Mortgage.