When Does Refinancing Your Mortgage Make Sense?

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[jamescadzow]

I was a mortgage banker for 15 years. You can actually convert a 30-year mortgage into a 17 year mortgage by sending only 1 Extra payment per year in January. So instead of 12 payments per year that you normal would pay, you make a total of 13 payments during each given calendar year.

That 13th payment needs to go to principal only and make sure you write that on the memo of your check otherwise the bank will assume it's their interest versus 100% Principal. You won't feel the added stress of making that high 15-year mortgage payment. Plus you will have the benefits of a 30-year loan payment with this accelerated interest reduction. This will drastically save you hundreds of thousands.

[mannyflores]

Im refinancing from a 4.375% to a 0% when I pay the mortgage off this year.

[connermcrae]

Just refinanced. Was 18 months into a 0 down 30 year 5.75% int, now i'm on a 15 year 2.25% int. With appreciation, my home value is now more than 80% of the loan so I avoided PMI too. Luckiest thing that's ever happened to me. My monthly payment went up $200.

[alejandrobatista]

I refinanced back in june from a 6.125% to a 2.99 with rocket mortgage, saving over 250 /mo. I'm still throwing that 250 and than some to the principal

[stevebrannon]

I like where Dave says your not going to refinance a 30 year loan at 3% to a shorter term loan, say 15 years. Just add the difference in loan payment to the 30 year loan. This is also helpful in these times of uncertainty. If something happens, job loss, or salary decrease, you can then go back to making payments based on the 30 year rate. If you refinance for a 15 year loan, if something happens, you are stuck with a higher payment that you can’t get out of, then possibly foreclosure. The only way to make a15 year payoff any better is if the interest difference is 5 or 6% between the two loan terms.

[harleylytsell]

Just refinanced our home went from a 30 year 4.75% rate with $87 per month going to PMI to a 15 year 3% rate no PMI we are ACTUALLY SAVING MONEY!

[CainTHill]

Thanks, Dave & Chris! No one has been able to explain the break-even point as clearly as you did. This will help me and my clients greatly.

[krassimirpetrov]

I just got one in which they paid me to refinance from 4.75 to 3.375 ..in other words the lender credit was more than the closing costs and my payment dropped 200/mo

[Je.rone_]

Looks like my math teacher was right, math is useful, and fun... fun cause saving money is fun

[jfvtnbm]

Watching this video talking about 3% rate in 2024. 😢 Rates are killing today!

[PassportBrosBusinessClass]

If you can drop 1 whole point, it’s worth it.

If you can drop 2, it’s even better.

I have excellent credit - 843 Fico.

I have 2 houses and want to refi the second.

When I bought the place in 2018, the prime rate was 4.7. My mortgage on it is $2020.

I don’t know how long I’ll keep the place or if I’ll move and that’s the main reason I don’t wanna refinance immediately.

Furthermore, the economy continues to worsen and the rates continue to drop.

But thus far, all I’ve been offered is 3.5%.

And they want $8000 up front. My break even is 5 years.

[JonathanRansom]

I'm in the middle of a refinance right now and going from a 4.375% to 2.0%. Woo!

[Kay-]

Oh my when he said he was going to keep it for 18 months...the reactions!

[VikramTuscano]

I would add one more thing to this. If you itemize your deductions for taxes, your savings are only 75% of interest difference (assuming 25% marginal tax rate). One more consideration, if you are getting rid of PMI as result of refi, that adds to your savings. More complications - you often have a choice on how you structure your refi - lower closing costs and higher rate or higher closing cost and lower rate; unless you plan to move soon, most people would be better off selecting higher closing cost but lower rate.

[johnhwang]

1% rate reduction on $200k saves less than $2k each year. The principal is lowered each month so over a year, it's less. The second year saves less and so on.

[mikethebeginner]

I hardly understood any of that. Do you have a resource that goes into the same issues in greater detail and with more explanation? Thanks.

[marksanders]

People also factor in their prepaids into the closing cost breakeven calculation. Probably costs less than the 5k he mentioned.

[heididiego]

Back in the days I was a single mom of three young kids and trying to make ends meet. I had the home in L.A. area and my mortgage was $2, 600 monthly. It was so hard I was just working to pay the bills and barely had any money for groceries, gas money , insurance, car loan. It was tough so I had no choice but to refinance my house three times within 10 yrs I spent there. I would take out all the equity and remodeled my house So once I sold it in 2007 for $665, 000 I owed everything I just got about $8, 000 of equity. I bought it for $229, 000 back in 1997 and sold it in 2007 for $665, 000. I've learned my lesson

[polozdemo]

Seeking advice..

I’m a first time home buyer with a 130k, 30 year mortgage @ 7.25 interest rate. I put a 3% down payment. And I pay 1, 120 a month. I would like to keep the home but don’t know if I should sell it or when to refinance. I make at least 3k biweekly and 0 debt . Thank you and I appreciate the time and advice . Really considering calling the show lol..

[laughlikecharlie]

I just went from a 30 year 4.5% down to a 15 year 2.375% ..my mortgage total went up about 8k after everything was said and done. Those guys don’t work for free. But hey, I’ll be saving over 100k in the long run