Submitted by [deleted] t3_z92gin in personalfinance
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Submitted by [deleted] t3_z92gin in personalfinance
[deleted]
If rates go down and you qualify for a new mortgage, then sure. That’s what people have been doing for the last 50 years, as mortgage rates dropped from 20% to 2%.
Google historical mortgage rates. USA facts have a great chart. Also, there are costs to closing after 2 years.
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Yeah you can refi but I wouldn't suggest doing a refi right away. Wait at least 10-15 years and make sure it makes sense and don't get trapped in further debt. I suggest checking a YouTube video on how refinancing works before proceeding.
It's bad advice to wait 10 or 15 years without major caveats. Refinance when it makes sense financially is a lot better advice.
The first time I refied was a year after I bought my house, I went from 5% to 4% interest rate, and the change in payments paid for the refi cost in less than a year, and I knew I was going to be living there for past that time period.
I would agree it's generally not a good idea to keep adding time onto a mortgage and prolonging interest but you can accomplish that and still lower your overall borrowing cost.
The reason why you should wait is because your mortgage normally consists of the most interests payments during your first 5 years or so. If you refi again right after you just got a mortgage, you'll just be paying the interest, not your debt. You should always pay down your debt first... your new refi will carry your outstanding debt... always pay down debt first.
I get what you are saying, the debt is known as principal and that's debt amortization, all pretty standard stuff. I would disagree though that that's a good reason for waiting in the long run if you do the math. You are right if you were only refing for a small rate drop though.
Rates don't usually change that drastically in 1-2 years anyway.
Uh, https://www.freddiemac.com/pmms disagrees. 1%+ year over-year change isn't uncommon at all, ofttimes it's been larger.
Werewolfdad t1_iyem2mx wrote
There is no guarantee rates will go down.
And we’ll almost assuredly never see 2020 rates ever again