Refinancing at 5.5% sounds enticing, but closing costs, origination fees, and loan term resets can cost you thousands if not evaluated correctly.
Refinancing only works when monthly savings recover the upfront costs before you move or refinance again.
Qualifying requires a minimum credit score of 620, a DTI ratio below 43%, and at least 20% equity to avoid PMI.
Closing costs typically range between 2% and 5% of the loan amount, including origination, appraisal, title insurance, and recording fees.
Usually no. With $6,500 in fees and $240 monthly savings, your break-even is about 27 months. Moving before that results in a net loss.
Finance Analyst
David Sterling is a personal finance writer covering mortgages, banking, insurance, and investing for Groundwork. He turns complex financial research into practical decisions.
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