Check the market closely to determine the available rates and the costs
associated with refinancing. These costs can include items such as an appraisal
and other various fees and points. Then determine what your new payment
would be if you refinanced. You can estimate how long it will take to recover
the costs of refinancing by dividing your closing costs by the difference
between your new and old payments (your monthly savings). However, the ultimate
amount you may save depends on many factors, including your total refinancing
costs, whether you sell your home in the near future, and the effects of
refinancing on your taxes. The old rule of thumb used to be that you shouldn't
refinance unless the new interest rate is at least two percentage points
lower. However, many companies are now offering zero point loans and low-cost
refinancing. Therefore, even if your rate change is less than one percentage
point, you may be able to save some money by refinancing.
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