The break-even point is about 33 months, so if rates keep dropping, the higher rate with the credit is better if I refinance before then. What do you think?
8 Likes
6% with $4,000 lender credits.
8 Likes
I would accept a 6% rate with a $4,000 lender credit, as long as there are no costs, no prepayment penalties, and house prices are stable.
7 Likes
It’s likely around 6%, but it depends on your liquidity and how long you plan to hold the loan. If you’re not short on cash and intend to keep the loan for 5-10 years, going with the 5.625% rate might make sense. It really comes down to doing a bit of math and considering how much cash you’d like to have on hand.
6 Likes
The cash from the lender credit isn’t needed right now. The decision is whether to take a chance on rates dropping soon enough to justify accepting the higher rate for the lender credit now and refinancing later.
6 Likes
That’s fair. I expect rates might come down in the next 12-24 months, though maybe not significantly from 5.625%. It’s hard to say for sure; either way, it’s a gamble, but one option leaves you with an extra $4k in hand.
6 Likes
Hold on. An ROI of more than 2 years isn’t great and may not be worth it; 33 months means you should definitely wait. Refinancing repeatedly isn’t the goal. If you believe rates will continue to drop, it’s better to hold off until they do. The costs just aren’t worth it right now; be patient.
5 Likes
This is the decision between loans for a new purchase.
5 Likes
Choose the option with the lowest cost and avoid paying any points.
5 Likes
Cash is crucial. Therefore, protect it.
4 Likes
I’d choose the one with the lesser out-of-pocket money for closing costs.
3 Likes
Is this a standard 30-year fixed conforming loan, or is it a HomeReady/Home Possible, FHA, or VA loan?
2 Likes
30-year fixed conforming.
1 Like
It depends on how long you plan to stay. You mentioned you break even after 33 months, which seems pretty clear.