The current cost to get down to the low 4’s is a simple math equation. For those who qualify, you will effectively prepay 2 to 3 years worth of interest to lock in a lower rate fixed for 30 years.
If the payback period is 3 years, it is like earning 33% a year on the investment, guaranteed.
Every year beyond that is additional savings. FREE money.
Most people, including mortgage folks, only look at the total cost divided by the monthly payment savings, which is not exactly correct.
Anybody who qualifies and plans on staying in the loan for at least 3 years should look at this.
Even if you want to pay the loan off in full in 5 years, these are better options than being in higher rate loans.
Those who don’t want to “waste money” by paying for a refi are “wasting money” every single month that they stay in a higher rate loan.
People would pee in their pants to get a 6% guaranteed return in a retirement account, but aren’t willing to understand a 33% return that is guaranteed.
Many people just don’t qualify today and are stuck in a silly rate forever because they got a “no cost” loan that will end up costing a small fortune in the long run. ,,penny wise, dollar foolish. HLS
