Question: It used to be that a two percentage points was the magic point to refinance > your loan. Today that thinking is changing just a little since mortgages > are larger. It might make sense to refinance for 1 % point — it varies. > Shop around and read the fine print.
Answer: And run the numbers through a spreadsheet’s loan amortization sheet. From that you can figure out how long the payback time is.
The loan will cost $X to refinance but your payments will be $Y less. For some amount of time, uhhh, Z we’ll say, $Y times Z will exceed $X. For example, if it costs you $5,000 to refinance but the loan payments are $125/month less you will be ahead with the refinance sometime after 40 months.
And if the refinance helps you get below the PMI minimum the payback period can be much shorter.
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