Refinance dummy!!

How do you decide if its worth it to refinance? Do you call random banks and see how it would work out? We've only been in our house for 3 years, but see it as the forever house. We have a rate of 5.125% for a 30 year mortgage. If we wanted to refinance, would it have to be a 30 year mortgage or can you do 25 years or 20 years? Also, what if you want to refinance, but don't want to put any money out of pocket into it, can you roll any expenses into it?

Re: Refinance dummy!!

You can roll the closing costs into the new mortgage. Generally, you want to see how long it is going to take you to re-coup those additional costs with the money you are saving on interest.

SO if your closing costs are $3K... in how many new mortgage payments will you save the in interest at the new rate?
If it's your forever home, then its probably worth it.

Also, yes do a 20 or 25 year mortgage when you re-fi. It would actually give you a lower rate, but your monthly payment would not be as low since you are paying more each month.

Re: Refinance dummy!!

You can refinance into anything you want really. You can go back to a 30 year mortgage and just pay extra towards the principal so you pay it off earlier, but yet have the flexibility to not pay extra any particular month. You can also roll your closing costs into the new mortgage.

With your rate now, you'd save a good amount with a refinance. We're going from 4.875% to 3.625% for a new 30 year mortgage with Bethpage Federal Credit Union and will save almost $300/month.

Refinance dummy!!

I thought I had heard generally a 2% rate drop is a no brainer for refinancing...otherwise you have to look at how many years you have left, the closing costs, etc... to see if worth it.