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Would it make sense to refinance a mortgage with seven years remaining just to lower the monthly payments?

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βˆ™ 2007-08-26 04:35:42

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There are a few things to consider when refinancing. One being the cost of the refi.

How much will closing costs be? For instance- your closing costs are going to cost you $5000 to obtain a new loan. If you are saving $100 per month on your payment by refinancing, it would take 50 months of saving the $100 to recupe the $5000. Leaving approx 3 yrs left to realize a true savings.

Most lenders will let you "roll" closing costs into the new loan when there is a good amount of equity in the home. You are still using the home's equity when doing this, so will need 50 months to recupe the closing costs @ $100 per month.

2007-08-26 04:35:42
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