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Refinance Trade-Offs

Monday, February 4, 2013 - 2:24 PM

The trade-off demonstrated here is true; but not wrothwhile if one sells the house within a number of years.  The cost of refinancing has to be balanced with the amount of interest saved; i.e., after a certain number of years, the interest saved will exceed the refinance cost for a typical with-cost mortgage.  It is beyond that balancing point that the refinance starts to be worthewhile.

The best approach is to get a no-point no-cost mortgage (i.e., a $8,500 cost mortgage is simply too much!); then any reduction in interest rate is definitely worthwhile.
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427
1. Monday, February 4, 2013 - 4:26 PM
There are many credit unions, Pentagon Federal (rates are higher now) First Community in Michigan for local people that have HE loans or mtgs with no appraisals, closing costs, points etc that can be used for a low cost mtg. I have seen a 12  year loan  as low as 2.875% with no closing costs of any kind. My son had one and now my other son is looking at getting one. The loan can be only for no more than 70 or 80% of the state assessment for home value. (value of home). It is a good deal for those that can do it. I believe Pentagon's 5 year is 1.99%. Think they have up to 20 years. 
Ally6770Ally6770930 posts since
Jan 16, 2010
Rep Points: 2,706