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To refinance or not…when a deal sounds too good to be true

So we got that infamous call…

“Hey, rates dropped, you want to refinance?”

And now…I need to math. Sure, the new monthly is going to be $100 less, but when you add $8000 of closing costs, and now another year or two to the loan, do you really save anything? Maybe long term, but short term? Even at the $100 it will take almost 7 years to make the closing costs back (minus the next months mortgage payment you get to skip) so why bother?

“What’s the offer?” tone is bothered, resigned to listen, not hopeful anything will change.

“2.8%” $6,000 closing costs.

“What am I saving monthly?” tone is now interested, possibility of actually saving something.

“You’ll go down $400 a month. And you get your escrow back…so…with skip payment….you’re $2000 out of pocket.”

That’s…5 months. And since the mortgage is only a year old…”YES!” I screamed without thinking.

A few days later I get the next call…the dreaded call…

“The rate changed.”

“OF COURSE it did.”

“Went down again. You’re locked in at 2.6%. And you qualify for a rebate under the mortgage terms, so you’re closing costs are now $4,000.”

“Wait…you’re telling me…I not only pay $400..”

“$500” my broker interrupted me. “With the new rate you’re saving $500 a month”

“I pay $500 less, but I’ll actually get money back on the closing when all is said and done?”

“Yes.”

I am now stocking food, water and ammunition in the basement. I am convinced the world will end before we get to the closing. There’s no way the universe will allow a deal that good to actually occur.