Question: Help make decision on home refinance?

(Posted by: ktm on 2008-07-15 09:24:29)

We owe about $79, 000 at 5.8 % on a house worth about $160, 000. We have about 23 years left. How much lower a rate should I look for before it's truly worthwhile to refinance? Our credit score is considered "perfect. " Thanks !

Posted by: Jeanne R on 2008-07-15, 09:39:40

You have a "below market " rate at this time so I don't think that it will "pay " you to refinance at this time. However, if you have any "extra " money you should first, pay off any debt that you may have and second, pay extra on the principal to reduce it and pay off your mortgage faster.

Posted by: golferwhoworks on 2008-07-15, 09:29:41

You do not need to do a thing unless you need cash to pay off high credit card balances and high interest as they are not giving 30 year money at that rate right now. To make just a rate and term refinance the rate needs to go down into the low 4% or less and that isn't going to happen any time soon I am a mortgage banker in TN & KY

Posted by: Steve on 2008-07-15, 09:30:03

At least a .5% reduction in the interest rate. If you wanted to shorten the loan to either 10 years or 15 years, you should be able to do that easily. However, if you are looking to take out cash with the refinance, you are going to end up paying a higher rate than you currently have.

Posted by: pagodaboy2001 on 2008-07-15, 09:34:54

I wouldn't refinance you are at a good rate, market is hovering just above 6% right now. Unless you have an ARM. If you do refinance calculate how much you will save in payments each month. Then take the cost to refinance divide it by the savings you'll save each month and that is the number of months it'll take to break even. Don't go by the rate, calculate it out so you can make a better judgement.