Is it better to get a lower interest rate with higher closing cost or the other way around?

I am about to refiance my home because I had a 3 year adustable rate mortgage. The rate is about to go up 3%. I have received two offers from lenders. They tell me If I pay more closing cost I can get a better rate. I plan to stay in my home 3-5 years max. Should I keep the interest rate with lower closing cost or pay higher for a lower interest rate. Please help!

Is it better to get a lower interest rate with higher closing cost or the other way around?

It really depends on how long you plan to stay in your home. For a more accurate picture use the calculators at CNN.money. Here is a good one that will compare up to three loan scenarios for you.

http://cgi.money.cnn.com/tools/cutmortga...

Is it better to get a lower interest rate with higher closing cost or the other way around?

If you are only planning to stay in your home for 3-5 years, take the higher rate and lower fees. It usually takes longer than that to break even. If you were planning to keep your home (and your loan), it would be better to pay the higher costs to get the lower rate.

Hope this helps!

Is it better to get a lower interest rate with higher closing cost or the other way around?

The break even analysis is simple.

Your payment will be %26quot;x%26quot; with the lower costs and %26quot;y%26quot; with the higher closing costs. Your break even point will be when the payment differential between the %26quot;x%26quot; and %26quot;y%26quot; payments equals the extra costs you have shelled out. So if you pay an extra thousand dollars but have a payment one hundred dollars less, your break even point will be 10 months. (10 months of 100 lower payments equals the 1,000 paid in higher costs.)

Is it better to get a lower interest rate with higher closing cost or the other way around?

Yes you can find a rate buy down calculator online and put in the details of the loan. it will tell you HOW long you need to be in loan (how many payments) it will take to re coop the cost of the buy down.

Is it better to get a lower interest rate with higher closing cost or the other way around?

It was put above me in a formula, but I%26#039;ll make it even simpler.

How much a month will you save in your payment with the lower rate?

How much extra are you paying for closing costs?

Divide the added cost by the monthly savings... that%26#039;s the number of months it will take to break even.

Generally speaking, 1 point takes about 18 months to break even and 2 points takes 30-36 months. Of course I don%26#039;t have your paperwork in front of me, but if you can email me with the following, I can tell you quickly:

Rate, loan amount, payment, closing costs.