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It’s a good thing I don’t have a job! Or else I’d be refinancing again… I think in the past 7 years, we’ve had 3 houses, and at least 8 mortgages! It seems like every time I turn around there is a lower rate, or a better loan. I turned into a refinance junkie.
I received a few emails and calls over the last few weeks asking about refinancing. Lots of the questions revolve around when it’s the right time to refinance and how do you know if you should.
I gave some pointers last spring in Are You Considering a Refinance? Here are more details on the break even point and where to find a great rate, two of the key concepts in a successful refinance.
Calculate your break even point. This will let you know how long it will take you to recoup the money you spend on a refinance. After the break even point, you’ll come out ahead. If you plan to sell or move before the break even point, you are better off staying with your current rate.
I couldn’t help but plug in our current rate at 5.125% and see that we’d break even in about 16 months. More about our mortgage is described in The Perfect Ten Year Mortgage.
Here’s another good break even calculator.
If you are shopping around, here are the places that I generally look first.
Refinancing is a hot topic right now because of the low rates. For further reading check out: