Great question! It used to be a simple answer…”if you are dropping your interest rate by 1.5 – 2.0% it makes sense,” (that’s when most people only owed $125,000 or less on their mortgages). Now the equation is more interesting.
When someone asks me if they should refinance we compare the current rate to the new rate, determine the cost savings per month compared to the cost to refinance and the total interest saved by refinancing. I can do this in a few short minutes over the phone. No appointment necessary.
Next…Is there enough equity left in the property to refinance? For some people if they refinanced today they would need to pay mortgage insurance where previously they did not (thank you, housing crisis). Adding monthly PMI could skew the need to refi.
I’m always happy to provide people with an honest assessment to their question, “should I refinance?” Their options, costs, and the pros and cons presented so they can make an informed decision. My opinion is free.
Equal Housing Lender.