Don’t Re-Fi Too Soon
If you’ve considered refinancing your home, you may have heard the advice that you should base your decision on a fairly simple equation: if the upfront costs of refinancing your mortage are less than the potential savings on monthly payments, you should refinance. But this article in the Tribune says that calculation is too simple, because a very small change in rates could meet that standard. A homeowner who refinances too quickly, say when rates drop by a fraction of a point, could miss out on more savings if rates fall further. An economist at the Federal Reserve Bank of Chicago says homeowners should wait until they can refinance at an interest rate at least one point lower than their current rate, and even lower for smaller loans.
