Some blanket statements here! First, there's no such thing as a refi with the bank's money. With a "free" refi you are paying in the form of a higher rate than you would have gotten otherwise, even if the rate you get is lower than your old rate. Just another form of negative points, which, you say you like. So far so good.I have never, ever, paid points on a mortgage. In fact, i always take negative points, and get paid for each refinancing. There's no point in buying down a mortage when there is no pre-payment penalty and odds are high that you'll be able to refi at a lower rate at some point during the mortgage term. It's always better to be playing the refi game with the "house's money." (well, the Bank's money, not the house). I'll refi for 1/4 point if I can do it for free or better yet, get paid for the effort. My last refi was at 2.15% for a 15 year -- and I was paid $10K in negative points at closing. Very few mortgages are held to term.
Except, negative points won't always be the right decision. If you got a 2.15% refi and $10k back, it means you could've instead gotten, let's make up a number here, 1.85% and no money back. With rates much higher today, it's unlikely you'll ever refi lower again. And there is some break-even point after which you will have been better off with the 1.85% instead of the $10k, and I would guess that you'll pass it within 15 years or already have.
Now of course 2.15% is a very low rate, so you're rightfully happy with it, but that's not the point. The point is that mortgage doesn't have to be held to term to benefit from points. There are abundant scenarios in which one may not expect to be able to refi lower within a typical breakeven period of 4-7 years, including yours.
Statistics: Posted by barnaby444 — Sat Aug 03, 2024 10:52 am — Replies 15 — Views 1157