What's Hot: The 4 Projects in the Works Near DC's Starburst Intersection | A 153-Room Aloft Hotel Pitched For Mt. Vernon Triangle
A $500,000 Refinance Scenario
With long-term interest rates dipping below 4 percent last week, many homeowners are likely thinking about refinancing their home mortgages.
So, how do you know when to pull the trigger? Some believe that a good measuring stick is to wait until mortgage rates have dropped 1 percent below the rate you locked in when you bought your home; others urge owners to balance the cost of refinancing with how much they will save every month at the new rate.
Another factor that plays into whether or not you should refinance is how long you plan to live in the home. If a borrower divides the costs associated with refinancing by the amount they will save on their mortgage every month, the calculated figure will be the number of months that it takes to break even. If you plan on being in your house longer than that, refinancing might make sense.
With the latter point in mind, we set up a refinancing scenario based on a $500,000 home purchase. For our purposes, the home was purchased with a 20 percent down payment back in August 2013 when rates stood at 4.58 percent. The refinancing would be done at last week’s rate of 3.97 percent and cost the borrower $6,000.
Using Zillow’s Refinance Calculator here is how things would look:
In short, the savings would amount to $196 a month and the borrower would break even on the refinancing costs after 31 months. So, it really would only make sense to pony up the $6,000 in refinancing fees if you plan to stay in your house for at least three years.
To try out your own refinancing scenario, click here.
See other articles related to: refinancing
This article originally published at https://dc.urbanturf.com/articles/blog/a_500000_refinance_scenario/9120.
Most Popular... This Week • Last 30 Days • Ever
In this article, UrbanTurf looks at the estimated annual maintenance costs associated... read »
Another concept has been unveiled for one of DC's most contentious development sites,... read »
The residential development in the works along Florida Avenue NE is looking to increa... read »
Renter demand has continued to push Class A apartment rents in the DC region up this ... read »
The big news in the development pipeline east of DC's H Street Corridor is the resur... read »
- What Are the Annual Maintenance Costs When You Own a Home?
- A First Look At The New Plans For Adams Morgan's SunTrust Plaza
- 46 to 48: The Biggest Project In Trinidad Looks To Get Bigger
- How Much Did DC-Area Rents Rise At The Beginning of 2024?
- The 4 Projects In The Works Near DC's Starburst Intersection
DC Real Estate Guides
Short guides to navigating the DC-area real estate market
We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Start browsing below!
First-Timer Primers
Intro guides for first-time home buyers
Unique Spaces
Awesome and unusual real estate from across the DC Metro