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Real Estate tiJ
Eileen M. Day REALTOR
WHEN SHOULD YOU
REFINANCE?
When should you refinance your mongage? When you'll save money by taking out a new mongage. I'm not trying to be cute. You will NOT always save money by cutting your mongage payment, because it invariably costs money to borrow.
Refinancing costs average around 3 percent of the principal borrowed — say, $3,000 on a $100,000 mortgage — though they could run much higher or lower. To end up ahead, you have to save enough money each month to recover your upfront borrowing costs.
The answer also depends on how long you expect to live in the home. Let me propose the “two-and-two rule." If you plan on owning your home for two years or more, refinancing begins to look attractive when you can reduce the interest rate by 2 percentage points. The longer you own your home, the greater your savings. Refinancing is especially hard to justify if you plan to sell in under two years except for a tremendous interest rate drop.
If there is anything we can do to help you in the field of real estate please stop In at EILEEN M. DAY, Realtor, The Clopton House, Washington, Va. 22747. Phone 675-3033. We re here to help.
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