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Can and Should I "Re-Finance"?

Discussion in 'The Lounge' started by dinkbuster1, Jan 15, 2009.

  1. bought my first house this summer, new to whole home ownership thing and learning things as i go. noticed in the paper yesterday that the rates are a whole lot lower now than when i bought my house in late April of '08. my finance rate was Fixed at 5.75% (still a great rate!) but now i am seeing rates between 4.50 and 4.75 on the same term mortgages (30 year fixed). i have owned my house less than a year and have a great rate but would be nice to have it even lower! i am totally clueless on "ReFinancing" and what the rules are. what am i looking at as far as Refinancing?
     
  2. Someone was telling me the other night they were looking into refinanacing last week and noticed that the fees have gone up for items such as title search. So due your homework and be carefull.
     

  3. I'm in the same boat as you, and our mortgage broker said you have to have 6 consecutive mortgage payments before you refinance. He also believes that the rates will continue to drop and we may even see 4% in the next few months!

    In your case, the savings of interest with the lower rate over the next 30 yrs will be much more than the upfront fees for application, appraisal, etc. If you have the $ for the fees now (some places there are no fees at all) then I would highly suggest looking into it. One thing to consider is that the appraisal may be lower than when you bought it in April of last year.
     
  4. Fees can vary from bank to bank so do pay attention to those costs. If you refinance with the same institution they may even cut you a break on things such as appraisal since it was just done. Your title and survey costs should be lessened as well bing that it is recent. I have always heard that if it is at least one percent change it is worth exploring. I would think that yours would definitely be worth looking in to since it has a long way to go on the mortgage. If you were well in to the existing mortgage then you would not benefit as much from the change.

    I just went in today and started my process for a new loan as well. Our bank is currently offering 4.375% on 15 year and I believe 4.5% on 20 year. I am going to a 15 year loan and replacing our 30 year mortgage that we are less than 8 years in to. My payment will only increase by around $25. For me it was a no-brainer. I am dropping from 6.25%.
     
  5. I looked up my situation and would cost about 3000 to save a little more than one percent. Go to the "Third Federal Savings" site for a good idea of closing costs. Pick the closest county and/or state to get an idea. They provide a list of rates and closing costs.

    The decision really depends on how far you are into the loan. If you have been paying for a while, you may be paying less interest/more principal and refinancing will start the curve (max interest/least principal) over again.
     
  6. Hey Dink, I have been working on this gig for the last month,( stil waiting for the right rate) in Dayton, US Savings Bank will do a refi for a $299 fee, plus an $80 Title fee and a $50 courrier fee, there rates, ( I call every day after about 10:00 am) , have been for the last few days, 5% for a 20 year and 4.875 for a 10 Year, these are the best rates in Dayton when you figure in the "points" or Fees. For example, to do a Refi through Wright Patt Credit Union, there fee is $2000 plus the 1st 6 months of Escrow up front, There rate is slightly better by .15 % but 1 way or another, youll be paying for it. Call me I can explain it to you but at your rate, there should be some money to be saved over the long run, best bet would be to maybe go from 29.25 years left to go to a lower Interest rate and pay about the same, then maybe get the loan down to maybe 22-23 years and that way more money is going towards principal so when you sell, the next time around, you may get out of paying PMI a little quicker. Also as stated before, a new appraisal is/may hurt you since as of 1 year ago, they no longer use the tax records as a guideline since its obvious Montgomery county tax values on properties is going UP while true appraisals are going down.

    Call me and I can answer most of your questions, I am on my 3rd house now and have refinanced before so I know the gist of what is going on.

    Salmonid
     
  7. H2O Mellon

    H2O Mellon Hangin' With My Gnomies

    Wright-Patt Credit Union is the best place in Ohio to go to!
     
  8. SConner

    SConner Fish Whisperer

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    Do your homework before you decide. As mentioned, there are lots of different deals available. If you think you can drop 1% it's worth researching, if you think you can drop 2% it is generally a no brainer. Remember, everything is negotiable ...try to get them to drop loan origination fees, and if you have enough equity get them to drop the PMI charge. Have bank run the numbers for you with fee's, points, etc rolled into principle then the math is real easy... Will my monthly payment be less without adding years to mortgage.

    Good Luck!
     
  9. You may want to increase your payment every month by 50.00 and leave well enough alone. Have your bank run the figures for you, you may be supprised.
     
  10. jennis9

    jennis9 Fish against the fish...

    dinkbuster, dockdabber is right - but take that one step further and make that $50 payment mid cycle. This way you are making a payment solely to the principal AND reducing the amount of that principal every fifteen days instead of thirty. You need to ask your bank about extra fees involved, but many shouldn't have them unless you want them to autodeduct - get into the habit and do it yourself - it pays off.

    If you run your numbers, you can create your own mortgage savings and save yourself from upfront fees. No banker needed. My father taught me to pay every 15 when I had my first loan and it pays off.

    Some banks will offer to do it for you - BE CAREFUL - you may end up with charges associated with them just making an autodeduction. When I bought my home in 02 - my mortgage holder offered me a 'new product' -- they would setup and autopay twice a month - but split my mortgage in half. Si I could pay a fee to be lazier. I'd rather have one deadline and be in charge on my own.

    IMO - I think the 15-year loan refi is sometimes a ripoff depending on your situation - you have to be in control yourself and make sure it adds up. my best friends bought a house in 92 and inquired about refinancing to a 15 around 2002 - they found that if they put the money they would have paid in points/fees toward their principal and made extra payments throughout each year - they would reap the benefits if a 15-year note at their current interest level - it was a wash. Even with a bad year thrown in due to cancer and loss of wages, they are planning on paying off the house this year.

    And don't forget that PMI doesn't just fall off when you hit 20% - you have to make sure to tell your mortgage lender that you are there and go through proper protocol to erase it.
     
  11. For a $100k loan example, 30yrs, 5.75%, payment is $583.57 (without tax/insurance) per spreadsheet. After one year, you owe $98.824k. Refi that amount for 30 but pay a little extra to keep it at 29 years (to compare same overall term) w/ 4.50% and payment is $508.94. Now let's up this by $2k closing costs and refi $100.824k for same 29 yrs, 4.5% and you have a $519.24/month payment and savings of $64.30/month. $2000 cost/($64.30 per month = 31 months for savings to overcome closing cost. Stay longer, you win.... This should give you some fruit for thought on analyzing refi deals. I couldn't run 1/2 years on my spreadsheet and the 100k could be any amount. Adjust your numbers and go online to find a loan calculator to nail it....
     
  12. You can find all kinds of mortgage calculators online to use for doing all the "what if?". Here is a pretty good one that will gives you the ability to figure in extra payments as well.

    Mortgage Payment Calculator

    I know there are some better ones out there if you do the search but this one is pretty decent.
     
  13. Big thing to to make sure you are going to stay in the house long enough to re-coup the closing costs etc...I'd figure at least 3 years...
     
  14. Treebass227

    Treebass227 Proud Member

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    There are low losing costs out there. Have to look around. The appraisal is a different issue. Hopefully you would be fine, but in todays market, foreclosures are not helping property values. Alot of places now want you to pay for an appraisal before they will really try to work a deal for you.
     
  15. My realestate guru buddy told me the general rule of thumb is that if you are planning on staying in your house for 5 years or more afterwards, refinancing to a rate 1.25% lower or more is a good idea.
     
  16. Guys if you are thinking about refinancing check with the lender you are with.they might do it for you it is called STREAMLINEING your loan which does not cost you a dime out of pocket.You can also do it for 15 20 25 30 years at the same time.I did mine about 5 years ago with the same mortgage company i was with and went from 30 to a 15 year loan.Any thing extra that you put on the princabel is money in your pocket.Call and ask your loan company...... Fishguy PS! They came right to my house and we did every thing at the dinning room table
     
  17. I just finished doing my half a million signatures for closing our refinance loan. We ended up getting in on a 15 year loan at 4.5%. I had mentioned earlier on this thread that they were offering 4.375% at one point but it jumped a bit before they finished our process. I think it may still be just a bit higher than the 4.5% but I am not sure how much. I just thought I would bring this one back up to remind anyone who may have been reading this with interest but did not take the plunge. We ended up with a new payment amount of $30 more than our old loan (30 year loan) but we are 8 years less on the completion date of the loan. I am pretty excited that we were able to get this done. It feels good to have it trimmed down a few more years all with one day of signing papers.:)