Refinance a househow many percentage points should you get to make it worthwhile?

Clement
Due to the fees and hassle, how many percentage points lower should you try to get to make it worth while.

Margarete
In the old days, it was always 2%. But now you can refi whenever the interest rate which costs ZERO fees is lower than your current rate. Right now a 5.9% loan has zero fees. A 5% loan will cost $4, 500. Only you can decide which is right for you..

Linnie
In an ideal situation, ZERO. In a real situation, the lower the better. "Points" are a percentage you pay the lender as a FEE upfront for making the loan! As if you were doing THEM a favor! This FEE is ON TOP of all the other fees and charges and acts more like a bribe than anything else. What exactly do YOU get as a benefit from paying this "fee"? Other fees and such actually GET you something, like a title search, which verified the title is free and clear of any encumbrances or liens, but what do you get for paying points? Like I said, less is better and ideally, zero. For the mortgage RATE, you need to calculate the full cost of the loan, principal AND interest that will be paid over time. Is the total you will pay for the refinance LESS than the remaining amount you will have to pay on your existing loan? If so, then refinance. Likely it will be 1% or more LESS than you are paying NOW to make this worthwhile. The straight interest RATE can be deceiving. For example, a 15 year loan at 7% costs you less over the life of the loan than 5% over 30 years does. So, does taking a 30 year loan at 5% make you a better deal? NO, as you will pay MORE over the life of the loan, but it DOES cost less per month. Whatever you do, DO NOT get a variable interest rate! AND figure the total cost over the entire life of the loan to determine which will cost you the least and then take THAT one, the one with the lowest total cost over the entire life of the loan. Make sure there is NO prepayment penalty or fee so you can pay the entire balance in full or apply a payment to principle at any time. By paying down the principle early, you can reduce the total amount of interest you pay by a substantial amount.

Cecilia
If you have a 30 year mortgage and you're almost halfway through, you already paid 70% of the interest. That's how the banks and mortgage cos. make their money. If it's fairly new and you have simply interest mortgage, you can always make additional payments each month to cut down on the interest. Call your mortgage co and request an amortization that will give you a complete break down between interest/principal.

Alethea
the rule of thumb if you can get a mortgage with 1% lower interest rate then it's worthwhile to refinance.