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Updated over 4 years ago, 07/11/2020

User Stats

258
Posts
35
Votes
Kumar Gaurav
35
Votes |
258
Posts

Refinance makes sense now? If Planning to sell in two years

Kumar Gaurav
Posted

I will most probably sell in 2 - 5 yrs does Refinancing makes sense now?

Thanks

Account Closed
  • Lexington, KY
77
Votes |
169
Posts
Account Closed
  • Lexington, KY
Replied

It takes on average 7 years to break even on a refinance. Unless your current rate is very high it doesn't make sense or unless you need the cash out.

User Stats

17,329
Posts
29,868
Votes
Russell Brazil
Agent
  • Real Estate Agent
  • Washington, D.C.
29,868
Votes |
17,329
Posts
Russell Brazil
Agent
  • Real Estate Agent
  • Washington, D.C.
ModeratorReplied

2 years no, 5 years yes

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User Stats

112
Posts
62
Votes
Jesse Hinaman
  • Lender
  • Sacramento, CA
62
Votes |
112
Posts
Jesse Hinaman
  • Lender
  • Sacramento, CA
Replied

All depends on current rate. I have clients that purchased less than a year ago and were dropping their rate from 3.875% to 2.8% with no buydown. The break even point is less than 2yrs with that big of a drop.

Also, you can look at a refinance as an equity advance. With 2 months no mortgage payment, and If you have impound account with old lender, that can equate to sizable amount of cash back. For example, with $400k loan amount, you’d get close to $10k back...but you increase your loan amount for about the same amount, so it’s equity advance.