| 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. |
