Author Topic: Would you do this refinance?  (Read 569 times)

cash2001

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Would you do this refinance?
« on: May 08, 2020, 03:43:51 PM »
Hello- I am trying to figure out if refinancing is the best thing for me to do. My husband and I purchased a home 4 years ago at 285k using a FHA loan with 3.5% down. Our monthly payment is 1640 (including 200 PMI that I really want to get rid of) and our current interest rate is 3.625%
I am able to lock in a 3.25% interest rate on a refi into a conventional loan with no PMI taking my monthly payment to 1335 but now back into a 30 year loan instead of 26. My estimated closing costs are 7500 (I plan to pay this out of pocket even though we are able to roll it into the loan). This is based off the appraisal coming in at 335k which I believe it will appraise at (I am a Realtor and know the comps in my area very well).
Closings cost breakdown is as follows:

discount fee (points to get the 3.25%): $1945
Admin Fee: $1150
Appraisal, credit report, flood cert: $769
Title insurance & fees: $2082 (I may be able to shop around and get this a little lower)
recording fee: $100
prepaid interest: $541
initial escrow payment at closing (insurance): $995

My calculations tell me I will save ~20k over 30 years.
Thoughts?
Thank you

cash2001

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Re: Would you do this refinance?
« Reply #1 on: May 08, 2020, 03:45:32 PM »
I should also add that we plan on living in this house at least another 5-7 years then would use it as a rental (this is not a property that we would ever sell).

Dave1442397

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Re: Would you do this refinance?
« Reply #2 on: May 09, 2020, 08:02:28 AM »
Sounds good, unless you want to hold on a few months and see if rates drop again. I've seen comments from mortgage brokers who think rates will go down some more.

We did a refi to get rid of PMI back in 2003. I think we only dropped from 6% to 5.375% at the time (30-yr mortgage), but it was still worth it. We did another refi to a 4% 15-year rate back in 2018.

If we keep the current mortgage, we'll have paid it off 18 months later than if we'd kept the original 30-yr mortgage, but we saved a lot by refinancing.

Rdy2Fire

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Re: Would you do this refinance?
« Reply #3 on: May 09, 2020, 09:57:43 AM »
I don't know current rates but this sounds like a good idea.

Again not knowing rates I'd also look at ARMS if you can get something like a 7/1 for a much better rate (not sure you can these days) you could make the same payment you would be on your 30 (paying extra principal) which would bring your term down significantly. This is how I was able to pay off my property in a third of the term. You can use this awesome calculator (personally I like the older version better) to play with your numbers  https://www.drcalculator.com/mortgage/

Rdy2Fire

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Re: Would you do this refinance?
« Reply #4 on: May 09, 2020, 09:59:29 AM »
FYI just noticed they had the link to the OLD in the new  https://www.drcalculator.com/mortgage/old/