# The Money Mustache Community

## Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Virtus3 on December 09, 2020, 08:06:23 AM

Title: Refinance question
Post by: Virtus3 on December 09, 2020, 08:06:23 AM
Hi all,

I'm curious if there is any scenario where it would make sense to refinance if we're planning to sell in the next 1-2 years?

Current home value = ~\$260-265k
Current mortgage = \$155k (30 year @ 4.75%)

Plan is to move in the next year or two; have come close to purchasing a new home several times over the last couple of years hence why we have not refinanced before but were delayed due to Hurricane Florence in late 2018/early 2019 and then COVID early this year.

We will definitely move in the next 2-3 years to get in a better school district before our girls start school (they are currently 2 and 6 months) but seeing as we keep getting delayed wondering if a low or no-cost refinance would make sense now. Thanks.
Title: Re: Refinance question
Post by: zolotiyeruki on December 09, 2020, 10:19:00 AM
It all depends on the closing costs and new interest rate.  A no-cost refi with a lower rate is a no-brainer, assuming you don't go out and blow your new-found savings on stupid stuff.

Take this equation:
( Refi closing costs) / (old interest payment - new interest payment) = number of months to payback, assuming a fairly short-term situation like yours.  If the time-to-payback is more than the time you expect to be in the house, then it's not worth it.  If it's shorter, then it's probably worth pursuing.
Title: Re: Refinance question
Post by: davef on December 13, 2020, 09:24:16 AM
It all depends on the closing costs and new interest rate.  A no-cost refi with a lower rate is a no-brainer, assuming you don't go out and blow your new-found savings on stupid stuff.

Take this equation:
( Refi closing costs) / (old interest payment - new interest payment) = number of months to payback, assuming a fairly short-term situation like yours.  If the time-to-payback is more than the time you expect to be in the house, then it's not worth it.  If it's shorter, then it's probably worth pursuing.

Exactly. Another thing to consider, I was in your same situation and we ended up not moving, and regretting we didn't refinance 2 years before. If its at least break even in the next 24 months (and I'm sure it will be with your current rate) I would do it in case you don't move as planned.