Let's assume that you are going to refinance your home, let's also assume the process will save you $100 per month through bill consolidation and a lower rate. If the closing costs equally $3500 than you are looking at a 35 month break-even point.($3500/$100=35 months more on this) This is nearly three years until you begin to save money at the rate od $100 per month.

Now, the question you most likely will be asked by the loan officer is "how long will you be in your home"? The relevant question is how long will you be in this loan. There is a HUGE difference in these two questions. The reason most loan officers ask the first question other that the second is that they can easily show a benefit if they get you thinking in 30 year terms.

Most people that refinance plan to be in there home for a long amount of time but not necessarily in the loan a long time. The majority of Americans are in a mortgage 3.8 years, but in a home well over ten years on average. Most people believe if they get a great rate they will be in the loan or mortgage for a long period of time. Most people who believe this are wrong, in fact almost 70% of all people will refinance within 5 years after buying or refinancing.

Remember, a lot of things happen to cause refinances other than rates too. Children happen, jobs change, unemployment, disability, sickness, vacations, bills, college and many other circumstances happen that can dictate that you refinance your home. If you are wrong about how long you are in your loan you could possible waste a lot of money.

We at Lendfast always urge our visitors to really evaluate there life style and future plans prior to refinancing. Always look at your loan in 3 year blocks that assumes you will refinance or leave the home in 3 years. This means that you need to break even with the monthly savings from the refinance on your closing costs between 2-3 years to safely make sure your refinance is really going to save you money in the long run.