Mortgage Finance Blog

Hi there everyone! Happy Holidays! It appears that interest rates are at an all-time low. We recently refinanced a gentleman at 4.5% on a 30 yr fixed loan. That is an incredible rate, especially when he only purchased the home at the beginning of September. It just, so happened, that this particular client had money-down and a little extra cash for your typical closing costs this time around.

Is it worth it? How can I calculate a break-even on the refinance?

Let's keep going with this example to help you figure out whether or not the deal is worth it. Our client saved $200 per month on the refinance. His total costs were $3400. We take the costs and divide it by the monthly savings. This gives us an indication of the amount of months that it will take to "break even.

So, $3400 divided by $200 equals 17 months. This person wants to hold the property for at least 5 yrs or 60 months. So from month 17 to 60 he saves $200 or ((60-17)$200) $8600 over the 5 years.

Is it worth it! One thing is for sure, it is worth it to tak a look to see if you can make it happen as well. Call us so that we can help you decide.

Until then, Happy Holidays! Q