Should You Sell or Refinance Your Home?

Deciding whether to sell or refinance your home is a big financial decision. By comparing the costs of refinancing to how long you plan to stay in your home, you can determine which option makes more sense. Here’s a step-by-step guide to help you decide:

1. Calculate Refinancing Costs: Include closing costs (typically 2-5% of the loan amount), appraisal fees, title fees, and other charges. For example, refinancing a $300,000 loan might cost $6,000-$15,000.
2. Determine Monthly Savings: Compare your current mortgage payment to the new payment after refinancing. For example, reducing your rate from 8% to 6.75% on a $300,000 loan might save $227/month.
3. Calculate Break-Even Point: Divide total refinancing costs by monthly savings to find out how many months it takes to recover your costs. Example: $9,000 ÷ $227/month = ~40 months.
4. Compare to Time in Home: If you plan to stay longer than the break-even point, refinancing might be worth it. If you’re selling soon, it may not be.

Example

• Current Loan: $300,000 at 8% interest, $2,201/month payment.
• New Loan: $300,000 at 6.75% interest, $1,974/month payment.
• Monthly Savings: $2,201 – $1,974 = $227.
• Refinancing Costs: $9,000.
• Break-Even: $9,000 ÷ $227 = ~40 months.

If you stay in your home for more than 40 months, refinancing saves you money. If you plan to sell in less than 40 months, selling might be better to avoid upfront costs.

Not sure how long you’ll stay? Contact me, Joaquin Gutierrez, at Canvas Real Estate (BK0625118), to crunch the numbers! Email: Joaquin@canvasre.com | Visit: https://YouBetterCallMe.com | WhatsApp: https://wa.me/13057856596.