What Is The 2% Mortgage Refinancing Rule?

What Is The 2% Mortgage Refinancing Rule?

This is a common rule that investors suggest that you follow when deciding to refinance your home. It stated that if by refinancing you aren’t going to drop your interest rate at least 2%, than it isn’t worth financing. This has been a saying people have used for years.

Should I Follow This Rule?

Instead of following the 2% rule, you need to determine the cost you are going to pay to refinance your home, and see if you are going to save more than that by refinancing. Sometimes, after re closing on your home, people end up paying out of their pocket to refinance, even if they had dropped their rate more than 2% of what it originally was. .

How Will I Know What It Will Cost?

Your lender should be able to figure out the cost of the refinance for you, by determining the rate of interest and what you will need to put down on your loan. After they give you a number, you can then evaluate what is going to be the best decision, and if it is worth refinancing your current mortgage.

Do I Have To Use My Lender?

You can shop are and compare rates and use any lender that you want when mortgage refinancing. It may not be worth lending with one lender, but with another it will. You will only know what is going to work best by comparing rates.

If you are interested in refinancing your home, I would suggest doing more research instead of just following the 2% mortgage refinancing rule. You want to make sure that a refinance is going to help you financially, and not hurt you or cost you money.

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