
Knowing exactly when is the perfect time to refinance would require a bit of psychic ability on your part. In 1999, for example, many would-be refinancers were kicking themselves for not locking in a rate before the Federal Reserve went on a tightening spree, and mortgage rates rose from their historic lows. That's why many experts say if you find a good deal that saves you a significant amount of money, it's probably not worth trying to beat it by predicting mortgage-rate moves.
So what rate would you need before refinancing makes sense? That's what this worksheet is designed to tell you. One thing to keep in mind, though: The interest rate isn't the only thing to consider when shopping for a new loan. Refinancing, after all, isn't free. There are the bank fees, the bills for a new appraisal and inspection, your lawyer's fee — you name it. This worksheet will help you figure out how much you'll save on your monthly payments with a lower rate and how long it will take, given those savings, to repay the cost of getting a new loan.
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