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The old and arbitrary rule of thumb said that a refi only makes sense if you can lower your interest rate by at least two percentage points for example, from 9% to 7%. But what really matters is how long it will take you to break even and whether you plan to stay in your home that long. In other words, make sure you understand -- and are comfortable with -- the amount of time it will take for your overall savings to compensate for the cost of the refinancing. Consider this: If you had a $200,000 30-year mortgage with an 8% interest rate, your monthly payment would be $1,468. If you refinanced at 6%, your new monthly payment would be $1,199, a savings of $269 per month. Assuming that your new closing costs amounted to $2,000, it would take eight months to break even. ($269 x 8 = $2,152). If you planned to stay in your home for at least eight more months, then a refi would be appropriate under these conditions. If you planned to sell the house before then, you might not want to bother refinancing.
Don't make the mistake of choosing a mortgage based only on its stated annual percentage rate (APR), because there are a variety of other important variables to consider, such as:
The term of the mortgage -- This describes the amount of time it will take you to pay off the loan's principal and interest. Although short-term mortgages typically offer lower interest rates than long-term mortgages, they usually involve higher monthly payments. On the other hand, they can result in significantly reduced interest costs over time.
The variability of the interest rate -- There are two basic types of mortgages: those with "fixed" (i.e., unchanging) interest rates and those with variable rates, which can change after a predetermined amount of time has passed, such as one year or five years. While an adjustable-rate mortgage (ARM) usually offers a lower introductory rate than a fixed-rate mortgage with a comparable term, the ARM's rate could jump in the future if interest rates rise. If you plan to stay in your home for a long time, it may make sense to opt for the predictability and security of a fixed rate, whereas an ARM might make sense if you plan to sell before its rate is allowed to go up. Also keep in mind that interest rates hovered near historical lows in recent years and are more likely to increase than decrease over time.
Points -- Points (also known as "origination fees" or "discount fees") are fees that you pay to a lender or broker when you close the deal. While a "no-cost" or "zero points" mortgage does not carry this up-front cost, it could prove to be more expensive if the lender charges a higher interest rate instead. So you'll need to determine whether the savings from a lower rate justify the added costs of paying points. (One point is equal to one percent of the loan's value.)
How Much Would You Save? A homeowner with a 30-year, $200,000 mortgage charging 8% interest would pay $1,468 each month. The table below illustrates the potential monthly savings and the various break-even periods that would result from refinancing at different rates.
Finally, keep in mind that your current lender may make it easier and cheaper to refinance than another lender would. That's because your current lender is likely to have all of your important financial information on hand already, which reduces the time and resources necessary to process your application. But don't let that be your only consideration. To make a well-informed, confident decision you'll need to shop around, crunch the numbers, and ask plenty of questions.
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Much of Michigan law on medical malpractice is codified at Mich. Comp. Laws Ann. 600.2912 through 600.2912h (West 2000). Subjects covered there include the elements of a malpractice action, a compulsory procedure for notice and discovery prior to filing suit, and affidavits of merit. The legislature made major changes to the laws of medical malpractice effective April 1, 1994, so the information below will not always apply to cases arising before that date.
A medical malpractice action may be brought within two years after the act or omission that forms the basis for the claim. Alternatively, it may be brought within six months after the claimant discovers or should have discovered the existence of the claim, so long as it is brought within six years after the act or omission. Mich. Comp. Laws Ann. 600.5805(5) and 600.5838a (West 2000). The six-year statute of repose is constitutional. Sills v. Oakland General Hospital, 220 Mich. App. 303, 559 N.W.2d 348 (1996), cert. denied, 456 Mich. 908, 572 N.W.2d 661 (1997). It does not apply if the health care provider's fraud prevents discovery or the injury involves the claimant's reproductive system. Mich. Comp. Laws Ann. 600.5838a (West 2000). Minors have the benefit of the foregoing rules. In addition, a minor's action may be brought any time before the minor's tenth birthday (or fifteenth birthday for injury to the reproductive system). Id. If a claimant is insane when his medical malpractice action accrues, he may bring an action up to one year after the disability is removed. Mich. Comp. Laws Ann. 600.5851 (West 2000). An action for wrongful death accrues on the date of the wrongful act, not the date of death, and is governed by the statute of limitations that would have applied had the decedent merely been injured. Hawkins v. Regional Medical Laboratories, 415 Mich. 420, 329 N.W.2d 729 (1982). However, the wrongful death "saving statute" can extend either the two-year or six-month period. If the injured person dies before the statute runs (or within a 30-day grace period thereafter), his personal representative may sue within two years after being appointed so long as the suit is commenced within three years after the statute expires. Mich. Comp. Laws Ann. 600.5852 (West 2000); Miller v. Mercy Memorial Hospital, 466 Mich. 196, 644 N.W.2d 730 (2002). A person intending to file a medical malpractice action must first give written notice to the prospective defendants at least 182 days before the action is commenced. (This period can be reduced under some circumstances.) Mich. Comp. Laws Ann. 600.2912b (West 2000). Giving notice tolls the running of the statute of limitations for 182 days. Mich. Comp. Laws Ann. 600.5856(d) (West 2000); Omelenchuk v. City of Warren, 461 Mich. 567, 609 N.W.2d 177 (2000). However, time continues to run unless the claimant complies with all the provisions of the notice statute, which calls for detailed information. Roberts v. Mecosta County General Hospital, 466 Mich. 57, 642 N.W.2d 663 (2002). There are circumstances under which a new party may be added to a lawsuit even after the statute of limitations has expired, so long as the lawsuit was filed in a timely manner against some defendants. Mich. Comp. Laws Ann. 600.2957(2) (West 2000).
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