Many years ago, people used to say that in order to refinance, you had to go down a full percent for it to make sense. That is not the case today. What makes sense today is how much you are saving monthly and how much will it cost you to do the loan? My own rule of thumb is that if it takes you over 3 years to make up the cost, then you may not want to refinance. It also depends on how long you plan to stay in the house at the time you refinance as well. The other thing to consider is how many years have you been paying on this mortgage and if going back to a 30 year makes sense or if lowering the term works as well.
There are many different factors on whether or not to refinance, and your loan amount is also a big factor. The higher your loan amount, the less of a percentage you need to go down to in order to save some good money. Lower loan amounts may benefit more by reducing the term with the rate for a refinance to make sense. As always, check with a mortgage professional to run the numbers for you to determine if a refinance is a good idea or not.
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