Alternative to Sell

Refinance in some instances will be a good alternative to sell to lower the interest rate or obtain the equity of the property.

In the past, homeowners were advised to refinance if they could get a rate that would be at least two percentage points lower than the current loan.

Nowadays, homeowners are not only concerning about the 2% rule, buy also the cost to refinance the new loan.

In deciding if refinancing numbers will work for you, the rule is to figure out how long it will take to recover the cost of refinancing.  For example, if the cost of refinancing is $3,000 (points and miscellaneous fees) and you reduce your monthly   mortgage payment by $100.  It will take 30 months to get back the cost of refinancing.

Factors to consider before refinancing:
  • New interest rate versus old interest rate
  • How long you plan to stay in the property
  • Loan term (years) of new loan Vs old loan
  • Cost and points

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