Many clients ask if there is a general rule of thumb regarding how much you need to cut off your interest rate to make it worth it to refinance.

Determining whether to refinance is based entirely on your break even period. You want to look at the amount you will save each month by lowering your interest rate, and divide that into the costs associated with refinancing.

Whatever number you come up with will be the number of months it will take to break even. If you plan to live in your home longer than that number of months, then it is probably worth it to refinance.

General rules you sometimes read about regarding the rate having to drop a certain percentage before you refi should be disregarded as it really comes down to the hard math regarding your loan amount, the jurisdiction you live in (and associated costs with refinancing), and the length of time you plan to stay.

There are sometimes opportunities to refinance with no closing costs and a slightly higher new rate (but still below your current rate). This almost always makes sense. That is just free money.

If you are interested in exploring refinancing, just let us know and we will be happy to refer you to one of our trusted lenders.