Loan Refinance Mortgage
Refinance Mortgage ???????????????
Guys I just bought my first home, an Air Force veteran. got a mail says im eligible for an interest rate cut through some VA approved lender. My current rate is 5.0%, they are offering 3.75%. But im not planning to keep this home for over 5 years. So shuld I worry about refinancing it paying all these costs? I already paid about $ 1500 on my points when I got this loan.Does it really worth the difference if I dont keep it for a long time?
Hello Jose, What you need to do is look at the total closing costs and divide your # monthly savings to see if it's worth it. Here's an example: If you have a loan amount of $ 200,000 at 5% your PI payment should be around $ 1106.93 per month. Let us now say that closing costs are $ 5,000 and they will be added to your loan. Now you have a loan of $ 205,000 at 3.75% for a 3 year ARM? with monthly payments of $ 954.13, giving you a monthly saving of $ 152.80. Now take the closing costs of $ 5,000 and divide by the monthly savings of $ 152.80 = 32.72 months. This means that you will break even when you hit the 33rd months. Is it worth it you?