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4

What are the downsides to refinancing? The downside is you pay closing costs upfront. The interest you save needs to make up for the closing costs within a reasonable time frame (4-5 years is a common rule of thumb). So if you pay $5,000 in closing costs and save $100 a month in interest, in 50 months you'll have made up the closing costs in interest ...


0

An interest reduction of 0.5 % does not sound like enough for me. I used a payout of 3 years maximum, That is; the total monthly savings in a maximum of 3 years must exceed the cost of the new mortgage. One thing to consider is the average home mortgage lasts about 7 years until the house is sold. I have refinanced about 10 times ; I have had several houses ...


2

Different sources will give you different answers to this question, but typical recommendations are that you want to drop the interest rate by 1% or more to justify the closing costs involved in refinancing.


3

The basic answer is that mortgages are designed and priced as callable bonds. The lender or buyer of the mortgage knows, going in, that if rates fall significantly, they will not receive the corresponding "windfall" unless you (the borrower) drop the ball and neglect to refinance. Their economic loss has already occurred because they treat you as a rational ...


2

You just said that they previously sold it. So they've made as much off it as they can, unless you move to them (again). Then they can get their fees (again) and possibly sell it to another company again. Right now, it's your current company that will "lose" because they were expecting to get a majority or all of the remaining interest and now the credit ...


3

In other words the credit union would lose some money in this scenario (they would get more in the long term from the interest). You may pay less interest in the long run, but the bank is not necessarily "losing". The reason that you are getting a lower interest rate is because the interest rates that the bank is paying to borrow money (i.e. from the US ...


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