Is there a rule of thumb for home refinancing?

Donnie
I'm thinking that there is some rule that says something like "Refinancing your home makes sense only if you intend to stay in the same house at least "X" number of years and you can reduce your rate by at least "X" percentage points. Is there such a rule?

Brynn
To make sure refinancing makes sense, it's wise to calculate your break-even point. If you are planning on staying in the loan/home longer than that point, generally, it makes sense. To calculate your break-even point, divide the cost of refinancing by the amount of money the refinance will save you each month. So, say it costs you $3, 000 to save $200 a month. $3, 000 / $200 = 15. It would take you 15 months to recoup the money spent on refinancing and realize pure savings. If you plan on being in the home for at least another 2 years, refinancing makes sense. Hope this helps!

Del
I do not think its a set rule but you would need to show a benefit as to why you would pay cost to refi for example reducing your rate by at least 1% or going from a adjustable to a fixed or going from 30 year to 15 year depending on size of your loan usually takes a couple of years to recoop your closing costs

Deadra
Usually five years and at least one percent - but it depends on what the refi will cost in fees.