Analyze
Your Savings
Check
the market closely to determine the available rates and the costs
associated with refinancing. These costs can include items such as
an appraisal and other various fees and points. Then determine what
your new payment would be if you refinanced. You can estimate how
long it will take to recover the costs of refinancing by dividing
your closing costs by the difference between your new and old payments
(your monthly savings). However, the ultimate amount you may save
depends on many factors, including your total refinancing costs, whether
you sell your home in the near future, and the effects of refinancing
on your taxes. The old rule of thumb used to be that you shouldn't
refinance unless the new interest rate is at least two percentage
points lower. However, many companies are now offering zero point
loans and low-cost refinancing. Therefore, even if your rate change
is less than one percentage point, you may be able to save some money
by refinancing.
