Now that you understand what is actually included in closing costs (and you may what isn’t really), why don’t we come back to our very own analogy. Thought Tom and you will Patty’s refi closing costs are 3%.
Now we could cause for just how long they must live-in their home because of their refi offers to recuperate their closing costs. To achieve this, we need to examine the fresh amortization plan of your own latest mortgage on refinanced alternative.
Using the example (together with amortization agenda on the financial calculator), you will see you to Tom and you will Patty do spend around $21,600 when you look at the interest over the second 36 months along with their current 30-year financing in the a beneficial 4% interest.
On the bright side, the new fifteen-year refi during the step 3% desire do merely rates him or her on $15,700 when you look at the attract the original three years.
That $5,900 is over the $5,700 closing costs Tom and you will Patty will pay after they re-finance. Continue reading…