Q: Would it be a bad idea to refinance my home if I were planning on selling a year from now?

A: It’s not a bad idea. It may just not be cost-effective. Look at how much it will cost you out of pocket to refinance and how much you will save each month. Then, calculate how many months it will take you to pay off the costs of the refinance. I’m guessing that it will take more than a year which means refinancing if you’re going to sell in a year may not make much financial sense.

One final thought: In today’s market, plans are easily made but not so easily kept. You might plan to sell your home in a year, but it might take a lot longer than you think. Just be aware that if your home is listed for sale, you will have a hard time completing a refinance of your mortgage. Many lenders will not refinance a loan if the home being refinanced is listed for sale or has been listed for sale recently.

Feb. 27, 2009