Should I Refi to Save 100 Dollars a Month?

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Should I Refi to Save 100 Dollars a Month?

Question: I have 29 years left on a 30 year fixed mortgage…

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I have 29 years left on a 30 year fixed mortgage with a balance of around $192,000 at a 4.75% interest rate. I have a refinance offer for a 30 year mortgage at a 3.875% fixed interest rate that would save me approximately $100 a month. I estimate that I would break even, as far as paying back my closing costs, in 27 months. Is this a good deal, or should I wait and see if rates fall lower?


It depends. If you’re saying the refinance is going to cost you approximately $2,700 and that’s how you’re determining that break even point, the math isn’t quite right. You have to consider when you’re making that extra $100 payment, you’re also putting much more towards principal and reducing the term of your loan. That’s probably best to go over this scenario with your mortgage broker, so they can give you the true cost of the refinance to determine if it makes sense for you. Waiting to see if rates will drop is a little risky, but again, consult with your mortgage broker so they can guide you.

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