There are lots of “rules” to refinancing.  It’s like blackjack.  People think that if they follow the rules, they will always come out ahead.  However, when rates are THIS LOW, you can really toss SOME of theose rules right out the window.  Here are three rules you can break when refinancing your home right now.

Ignore the 1% Rule

Conventional wisdom used to be that refinancing wasn’t worth it if you didn’t save at least 1% on your interest rate.  It makes some sense, but isn’t always applicable.  You can definitely make money even if you’re only dropping a half point.  However, this depends on your math.

If you want to find the break-even point, look at your total savings per month and divide it into the total closing cost amount. So if closing costs were $5,000 and you saved $200 a month, it would take 25 months before you broke even with those closing costs and began saving money.)

Refinancing isn’t only for 30 year homeowners

Every homeowner has the same impetus to refinance.  It can change your math though, if you’re looking to flip your home after a few years.  Again, it’s all about the math.  Find out your closing costs and figure out what you’re saving.  It’s important to know your break-even point here, too.  Look at the example above.  You break even just after 2 years.  If you’re keeping your home longer than that, you’re making money on the flip.

Keep your options open

Make sure that you shop around.  Don’t just call your bank and ask them what to do.  You need to compare rates across different lenders.  Let the mortgage companies do their job and find you the absolute lowest rates for you.  It’s your money, so find who treats you the best on your mortgage and go with them.  You’re not locked to your bank for your mortgage, and you aren’t stuck with the mortgage company you started with, either.  Make sure you’re paying the least possible money every month.

Call The Home Loan Expert Team in St. Louis at (314) 781-9700, Chicago at (773) 770-4727, Indianapolis at (317) 550-1515, Nashville at (615) 810-8555 or Birmingham, AL at (205)721-7656.  You can always apply online at for your VA Loan, and for your other mortgage needs, and we’re also open on Saturdays and will come to you to help close your loan. We work hard to make it easy on you.  Nobody gets lower rates on better loans than The Home Loan Expert, Ryan Kelley, why go anywhere else?

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