If let’s say your interest rate is 6% but you want to refinance to 4% and it costs 2% to refinance, doesn’t that just make it the same number in the end? Google says the cost of refinancing is roughly 2-6% of the full loan. I don’t get how it makes it cheaper to refinance? Just seems like you’re paying the money upfront then. Please eli5! Feel like I’m missing something.
In: Economics
The bank will tell you that if you can reduce the interest rate by a certain percentage then it is worth it to refinance. It is not to your advantage to refinance every time interest drops one quarter percent. I’m sure that formula changes over time depending on lots of other factors, that is why I always asked.
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