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How do I decide if a refi fee is reasonable or "worth it?"
With the recent rapid rate drops, many of my clients are contacting me about this same issue. choose the lender you'd like to work with. Your lender should provide you with a GFE so you can have a complete summary of all of the costs you'll incur IF your refi.Then all you need to do is compare what you have now to what you would have if you keep your current loan. It's easiest if you use simple interest (but not 100% accurate). If you owe $200,000 and your current rate is 6.5%, you will pay $13,000 of interest annually (or $1,083.33/month). If you can get 4.75% your annual interest would only be $9,500 (or 791.66.month) - providing you a monthly savings of $291.67. So now just divide your closing costs by your monthly savings and you'll see how many months you need to keep your loan to recoup the refi costs. For this example, if your refi costs are $3,500, it would take you 12 months to recover the closings costs.
Date: December 21