“Figure it Out” – Plain White T’s
We’re constantly bombarded by lenders to refinance our mortgage under a variety of programs. The volume of offers can almost make you numb to the rational consideration. There are some common rules of thumbs that homeowners and agents use such as not refinancing more often than every two years or there must be at least 2% savings from your previous mortgage rate may not always be accurate. But you have to figure it out for yourself!
The reality is that if you can refinance for a lower rate and you’ll be in the home long enough to recapture the cost of refinancing, it should be considered. The costs of previous refinancing that haven’t been recaptured by monthly savings may need to be added to the costs of the new refinance. But, if you are “even” on a former refinance or have NOT recently refinanced, you simply need to “run the numbers”! How long will it take you to “make up” the amount it will take you to refinance?? If you think you will stay in your current residence that long or longer, then it’s definitely beneficial. I have to say that refinancing is enough work that I guess I’d want to believe (we never know for sure) that I was going to do better than break even. So, I would want to think I’m going to be in that residence for awhile after the “break-even” point!
Take a look at the chart that shows the average rates according to Freddie Mac for 2012. They are lower today than they were in January of 2012 and for the ten years before that.
Refinancing may save you a substantial amount of money, especially if you’re going to be in your home for a long time. It is definitely worth investigating. To get a quick idea of what your savings could be, use this refinancing calculator.