If we are thinking about selling our home within 3 years does it still make sense to refinance?

I get this question all the time so it about time I answer it for all to see. And the answer is - It “depends”.

It depends on:

Where do you think real estate values for your home will be in 3 years…high than now or lower?

What if home values in 3 years are lower…could you sell…would you sell even at a loss?

Is your move in 3 years “optional” or “mandatory” due a change in job or some other reason?

If your reason for moving is a “growing family”, could you improve your existing home adding the extra room to accommodate family needs?

Does your existing loan have an adjustable rate, balloon feature, or other “exploding” term, that motivates a refinance? If so, will that dangerous term kick in before your 3 year selling time frame occurs?

What at first blush appears to be a “basic” question, now turns into rather complex mish-mash of personal loan terms and market forecasting making a simple “one size fits all” answer impossible.

I can tell you this…always err on the side of less refinancing vs. more refinancing. The banks and brokers are selling the idea of “serial” refinancing with their come-on advertising lies about “no cost” mortgages…

Don’t fall for it.

Rich folks know the way to get the “best loan” is to pay the costs driving the rate down…but they also know costs to buy homes or refinance are significant, so you can’t do it very often in your life without it impacting your net worth.

Dr. Stanley’s best selling book, “The Millionaire Next Door”, showed that most self-made millionaires lived in the same house for 27 years…which is why they still live next door! I bet if he expanded his study he’d find, they virtually never refinance once they’ve locked in a long term low rate. You couldn’t pry that low fixed rate out of their hands for all the tea in China.

Follow their lead!