Posted on: 05th Oct, 2009 07:12 pm
when speaking about refinancing and the 2% rule, is 2% the same as 2 points?
e.g.
-pucrchased condominium 10/2005 for: $249,950
-paid $73k down
-original loan amount: $180k
-current loan balance: $172k
-have conventional 30 year fixed mortgage rate @ 5.875%
-plan on staying at least 2 years
-should we refinance?
e.g.
-pucrchased condominium 10/2005 for: $249,950
-paid $73k down
-original loan amount: $180k
-current loan balance: $172k
-have conventional 30 year fixed mortgage rate @ 5.875%
-plan on staying at least 2 years
-should we refinance?
Shoudl you refinance will depend on what would eb yoru closign cost and how much you will save by refinancing
If the interest is goign to be so low that you will save in 2 years more than what you spend on the closing, then I woudl say go for it
If the interest is goign to be so low that you will save in 2 years more than what you spend on the closing, then I woudl say go for it
Hi kmajorki,
The 2% rule is not similar to paying 2 points. According to the 2% rule, you should check out that your mortgage is reduced by 2% when you refinance it. If it's reduced by 2%, then you would be benefited from the refinance. To know more about 2% rule, check out the following page:
http://www.mortgagefit.com/discuss/2percent-rule.html
As you plan to stay in the property for just 2 years, I don't think it would be a good option to refinance the loan. You'll have to pay the closing costs when you refinance the loan. It is always better to refinance the loan if you are planning to stay in the property for the next 6-8 years as it would help you in offsetting the cost for refinance.
Thanks
The 2% rule is not similar to paying 2 points. According to the 2% rule, you should check out that your mortgage is reduced by 2% when you refinance it. If it's reduced by 2%, then you would be benefited from the refinance. To know more about 2% rule, check out the following page:
http://www.mortgagefit.com/discuss/2percent-rule.html
As you plan to stay in the property for just 2 years, I don't think it would be a good option to refinance the loan. You'll have to pay the closing costs when you refinance the loan. It is always better to refinance the loan if you are planning to stay in the property for the next 6-8 years as it would help you in offsetting the cost for refinance.
Thanks
I do not necessarily agree with the 2% rule. Every loan scenario is different. For example, someone may refinance for a rate that is ONE percent lower if they are also moving from an ARM to a Fixed rate. Borrowers who have a very high loan balance may see significant monthly savings by refinancing to a rate that is less than 2% lower than their current rate.
Thats is really a good poitn eric
2% rule is not for every one
2% rule is not for every one