Breaking Even on Closing Costs

Divide total closing costs by your monthly savings to estimate the break‑even months. If you’ll keep the loan longer than that, the math usually works.

Rates matter, but so do fees and the time you plan to keep the loan. A slightly lower rate may not help if closing costs are high and you expect to sell soon. The most reliable way to compare real cost is to look at the APR, review the Loan Estimate line items, and calculate your break‑even point.

Your credit profile influences pricing more than most people realize. Paying down revolving balances to reduce utilization, disputing clear errors on your report, and avoiding new hard inquiries in the weeks before you apply can meaningfully improve the offer you receive.

Documentation is straightforward but must be complete: recent pay stubs, W‑2s or 1099s, two months of bank statements, and government ID. Self‑employed borrowers typically provide two years of personal and business tax returns. Respond quickly to underwriting conditions to keep your timeline on track.

Equity and property value are equally important. A higher loan‑to‑value (LTV) often increases rates or adds mortgage insurance. If your appraisal could be borderline, gather comps, list improvements you’ve made, and be ready to confirm property details during the appraiser’s visit.

Finally, shop more than one lender. Request official Loan Estimates on the same day so you’re comparing like‑for‑like. Ask about lender credits, pricing for different rate/point combinations, and whether a no‑closing‑cost option makes sense for your hold period.

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• Should I Refinance Now?
• Best Time to Refinance a Mortgage

Educational only. We are not a lender.