When Should You Refinance Your Florida Mortgage?

The break-even formula

Divide your closing costs by your monthly savings. If closing costs are $4,000 and you save $200/month, your break-even is 20 months. If you'll stay in the home past 20 months, refinance. If not, don't.

Good reasons to refinance

• Rate drops 0.5%+ — savings exceed closing costs within 2-4 years
• Remove mortgage insurance — home value rose, you now have 20% equity
• Shorten to 15 years — payment goes up, but total interest drops by $50,000+
• Cash out for debt consolidation — pay off 20% credit cards with a 6% mortgage
• ARM about to adjust — lock in a fixed rate before it spikes
• Divorce or separation — remove a co-borrower from the loan

Bad reasons to refinance

• Rate drops less than 0.25% and you plan to move within 3 years
• You're extending a 25-year loan back to 30 years just for a lower payment
• Cashing out for depreciating assets (cars, boats, vacations)
• Your neighbor refinanced and you feel like you should too