Refinancing a mortgage involves obtaining a new mortgage to pay off your existing one. This swap leads to new loan terms and a revised monthly payment.
The break-even point is critical in refinancing; it represents when the savings from a lower rate surpass the costs incurred during the refinancing process.
Calculating your break-even point is vital. You do this by dividing your closing costs by the monthly savings, allowing you to assess refinancing's financial viability.
Homeowners typically refinance or move every 6.25 years, making understanding your break-even timeline essential for effective financial planning.
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