Should I refinance if I plan to sell in a year?

7 Replies

I’d really appreciate your thoughts here.

I have a house that has $275K in loan. Market value is $300K. I plan to sell and relocate in a year because with the average rent in my area, I’d be renting this at a loss.

I'm getting offers of 2.875% APR, and my current APR is 3.875. I'll be saving about $200 a month if I refinance, but my loan will jump up to 280K and I'm afraid of selling at a loss.

What do you think? Should I refinance or keep the same APR?

@Justin Bautista

So you’ll save $2,400 for the year, but loan is $5k higher? I’m assuming that’s because you’re rolling refinance into cost of loan. That’s a negative $2,600 for the year. Bad plan.

The total cost of the refinance would probably not offset the limited savings for a year People are usually surprised how high closing costs actually come out to be.  Usually a good refinance you plan to recoup your costs over a 3-4 year period . That would be a no since you are only staying 1 year  .

If you know you are going to sell it I would not refinance. The closing costs would outweigh the monthly savings.

Why are you waiting to sell it? 

why don't you sell it now Instead of operating at a loss for 12 more months?

@Justin Bautista

Don’t refinance it. You’ll get raked over with points, closing costs etc. it’s not worth it if you’re going to sell it that soon. Take a loss each month and sell it in a year when you’re ready. Who knows, maybe average rent in your area will go up and make it worthwhile to keep as a rental if you can at least break even.

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