The question is below and my answer to it follows.

If we are thinking about selling our home within 3 years, with that said, my question is, Does it still make sense to refinance?

My answer:

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 yearshigh than now or lower?

What if home values in 3 years are lowercould you sellwould 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 terms, 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 thisalways 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.

Dont fall for it.

Rich folks know the way to get the best loan is to pay the costs driving the rate downbut they also know costs to buy homes or refinance are significant, so you cant do it very often in your life without it impacting your net worth.

Dr. Stanleys best selling book, The Millionaire Next Door, showed that most self-made millionaires lived in the same house for 27 yearswhich is why they still live next door! I bet if he expanded his study hed find, they virtually never refinance once theyve locked in a long term low rate. You couldnt pry that low fixed rate out of their hands for all the tea in China.

Follow their lead!

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