Refinance

[mhailey]

Holy Crap are rates low right now!! We are refinancing our house, and it looks to drop our payment by $400 per month!!

[Bax]

I'm about to buy a house and it's looking good!!!

[jmsremax]

Wow...that is quite significant savings...BUT I need to ask (having been a real estate agent) without getting into too many details did you reduce the years, stay the same, or add more? Is it an ARM? The reason I ask is some people have been/still getting burned by mortgage lenders. Hopefully this is not the case.

[smokin5]

I'm in the process of refi'ing as we speak (type?).
Supposed to close Friday.
Dropped my rate from 5.75 to 4.5, reducing my
monthly payment almost 23%.
Granted, I'll be paying 7 years longer,
but at that rate, who cares? I can pay it off
early, or let my money ride at an historic low rate.

[jmsremax]

Originally Posted by smokin5

I'm in the process of refi'ing as we speak (type?).
Supposed to close Friday.
Dropped my rate from 5.75 to 4.5, reducing my
monthly payment almost 23%.
Granted, I'll be paying 7 years longer,
but at that rate, who cares? I can pay it off
early, or let my money ride at an historic low rate.

Is it a fixed rate or adjustable (ARM) that will reset in so many years down the road?

[yourchoice]

I'm investigating whether it will be worth it for me. I had what I thought was a killer rate of 5% for a 30 yr fixed that has 19 yrs left on it. I'm checking out what my payments will be for a 15 yr fixed rate. 15 yr rates are below 4% I think. If I can knock 4 yrs off the term and keep my payment the same or lower I'm doing it...so long as the closing costs permit it.

[jmsremax]

Originally Posted by yourchoice

I'm investigating whether it will be worth it for me. I had what I thought was a killer rate of 5% for a 30 yr fixed that has 19 yrs left on it. I'm checking out what my payments will be for a 15 yr fixed rate. 15 yr rates are below 4% I think. If I can knock 4 yrs off the term and keep my payment the same or lower I'm doing it...so long as the closing costs permit it.

These are my feelings when it comes to refinancing (at a lower rate).

[BeerAdvocate]

What are the upfront out of pocket expsenses for refinancing?

[mosesbotbol]

Originally Posted by BeerAdvocate

What are the upfront out of pocket expsenses for refinancing?

Depends how what your equity and credit rating. It's free to get estimates, so why not just check out your possibilities? Even if it is to say no thanks in the end.

[rizzle]

You should definitley be looking at 15 years right now. Have the mortgage guy run the numbers for you. It'll be worth your time and effort, I promise.

[smokin5]

To answer your question, jmsremax, it's a fixed rate - I'd never do an ARM.

My theory is to reduce the monthly amount as much as possible, given the uncertainty of the near future. Then, when the economy improves & I've got extra cash, I have the choice of making additional principal payments, thus paying it off earlier. This way, the option is mine.

As far as closing costs, mine were VERY low, estimated to be about $1,400.00, as the lender is paying the discount points for me.

[Mugen910]

Originally Posted by smokin5

To answer your question, jmsremax, it's a fixed rate - I'd never do an ARM.

My theory is to reduce the monthly amount as much as possible, given the uncertainty of the near future. Then, when the economy improves & I've got extra cash, I have the choice of making additional principal payments, thus paying it off earlier. This way, the option is mine.

As far as closing costs, mine were VERY low, estimated to be about $1,400.00, as the lender is paying the discount points for me.

people are so worried about ARMS being the worst thing for them but in reality the worst thing is if you forget that your interest rate is resetting. You can own your home with a lower interest payment for 5yrs on an ARM. You just have to make it down when your restructuring will be coming and refi before hand.

[BeerAdvocate]

When you refinance is it better to switch to a different bank or use the same one that your current mortgage is with?

[jledou]

Ask both Travis and see who is better. It is a very competitive market right now. We just did our house a couple months ago and we took 3 years off the term and are paying a little less monthly also.

[MikeyC]

I picked up a rate sheet from a local bank this morning and it lists a 30 year fixed at 4.25%. The rates really are unbelievably low.

I refinanced a couple of months ago and got 3.75% on a 5-1 ARM. Normally, I'd get a 30 year fixed, but there's no way we're staying in our condo more than 5 more years (the period for which the rate will remain at the current rate). So, it makes sense for me to go with an ARM and get the lower rate.

[Blueface]

I believe in refinancing to reduce interest payment, not mortgage payment.
I have refinanced my home three times in 14 years.
Twice it reduced my mortgage payment due to interest savings.
The last time was for what was the lowest rate at the time of 5.75% and go from a 30 year to a 15 year, which actually increased my payments a bit.

I was actually considering doing it again as I have been offered a 3.9% for 15 years but at this point in my mortgage, I am just better off sending additional payments as my goal is to finish paying the home off in the next four years.
Gotta tell you, I have been there where many often are with 30 years of payments ahead of them. I assure you there is no better feeling in the world than to know you have four years to go and about the same of an average car loan nowadays. Oh what a feeling!!!

[rizzle]

Originally Posted by Blueface

I believe in refinancing to reduce interest payment, not mortgage payment.
I have refinanced my home three times in 14 years.
Twice it reduced my mortgage payment due to interest savings.
The last time was for what was the lowest rate at the time of 5.75% and go from a 30 year to a 15 year, which actually increased my payments a bit.

I was actually considering doing it again as I have been offered a 3.9% for 15 years but at this point in my mortgage, I am just better off sending additional payments as my goal is to finish paying the home off in the next four years.
Gotta tell you, I have been there where many often are with 30 years of payments ahead of them. I assure you there is no better feeling in the world than to know you have four years to go and about the same of an average car loan nowadays. Oh what a feeling!!!

Quoted for truth.

I've only refinanced once, went from a 30 to a 15, payment increased by maybe $100, and now I can't do anything better. Already looked. And my joint will be paid for in about 7yrs when I'm 51. To me, that feels pretty good.

[mosesbotbol]

Stay away from an ARM if possible. If the fixed rate terms work, then that's it; no worries. Another thing to consider is over valuation of your property. If you take a loan out on a value you're never going to get, you'll be upside down and that is the worst.

13 payments a year will shave a lot of time and interest off of a mortgage.

[Starz26]

Just finishing refi from 5.5 with 23 years left on it to 4.25 for 15 years.

They way I figure out if it is a benefit is as follows:

1. How much additional principal do you have to put on the current loan to pay of within the term of the new loan? this = x

2. Difference in remaining months of current loan to new loan = Y

3. Difference in payment from new loan vs current loan = D

4. Closing costs = Z

Formula is: ((Y*X) - Z) - (D*new term in months)

So if you original loan has 23 yrs left and an additional $300/mo would pay it off in 15 yrs. New loan is 15 years with $60 less per month in payments and $8,000 in closing costs you would save:

((84*$300)-$8,000) - (-60*180) = $28,000 savings

Most of the time people will say that you should multiply the years saved by the monthly payment to see how much you would save but this is incorrect as you are really only saving the additional amount you would use to pay down the original loan faster. BUT, in this situation you pay off the loan faster without having to pay additional per month so it is a winning situation as long as the final number is more than $0.00

At least that is how I am thinking, anyone see issues with this process?

[yourchoice]

Originally Posted by Starz26

Just finishing refi from 5.5 with 23 years left on it to 4.25 for 15 years.

They way I figure out if it is a benefit is as follows:

1. How much additional principal do you have to put on the current loan to pay of within the term of the new loan? this = x

2. Difference in remaining months of current loan to new loan = Y

3. Difference in payment from new loan vs current loan = D

4. Closing costs = Z

Formula is: ((Y*X) - Z) - (D*new term in months)

So if you original loan has 23 yrs left and an additional $300/mo would pay it off in 15 yrs. New loan is 15 years with $60 less per month in payments and $8,000 in closing costs you would save:

((84*$300)-$8,000) - (-60*180) = $28,000 savings

Most of the time people will say that you should multiply the years saved by the monthly payment to see how much you would save but this is incorrect as you are really only saving the additional amount you would use to pay down the original loan faster. BUT, in this situation you pay off the loan faster without having to pay additional per month so it is a winning situation as long as the final number is more than $0.00

At least that is how I am thinking, anyone see issues with this process?

I'm trying to wrap my head around this equation. I am contemplating it differently. My new 15 yr mortgage (quoted today) would raise my payments about $60, but it would shorten my term by 44 months. The additional cost (for the 15 years) associated with the new loan would be 180*60 = $10,800 plus my closing costs. Conversly my last 44 payments would result in (in P&I only obviously) a cost of over $28,000. Now, the value of the dollar and other related factors are difficult to quantify, but I still think refi-ing would be the best bet. Using the equation you formulated actually suggests me not doing it. I'm not sure what I'm missing. FWIW (if you want to calculate it) I would have to raise my payments of my current loan $150/month to pay it off in the same amount of time.

FWIW, I do not see myself moving for a long, long time.