Should I Refinance One Month After Purchasing?

A refinance decision depends on a comparison of refinance costs and potential savings.

Yes, You Should

Refinancing your loan one month after purchase is a good choice if the interest savings caused by a lower rate justify the expense of the refinance. If you are going to live in the home long enough for the interest savings to exceed the refinance costs, it is generally a good move.

No, You Should Not

Refinancing your loan one month after purchase does not make sense if the interest savings caused by a lower rate do not justify the expense of the refinance. If you are not going to live in the home long enough for the interest savings to exceed the refinance costs, it is generally not a good move. The rate change in one month is often not substantial enough to justify another investment in your mortgage.

Bottom Line

Upfront costs (points, settlement, closing) to refinance, monthly payments and interest changes are factors to consider, along with your anticipated length of homeownership under the new mortgage, says Yahoo! Finance mortgage professor Jack M. Guttentag. Most bank websites offer refinance calculators to help you make a decision and determine how long it would take for your savings to cover your refinance costs.

References

• Yahoo! Finance: What Goes Into the Refinance Decision?

Resources

• The Mortgage Professor's Web Site: Refinancing That Makes You Poorer
• Wells Fargo: Am I Better Off Refinancing?