To take the decision to refinance a mortgage is just a simple comparison of costs versus savings, but that is only if you’ll replace an old fixed-rate loan with a new one.But a big “if” comes here.
A huge number of homeowners want to get out of adjustable-rate loans, and for them to tally the savings is trickier.
If in a month you save $200 from a new fixed-rate mortgage and closing costs were $4,000, then the savings would take 20 months to offset the costs. You would really save $200 in a month by refinancing, after that breakeven point.
Those homeowners who have adjustable-rate mortgages can’t pinpoint the monthly savings over the long term because they don’t know what their payments will be years down the road.