Author Topic: Refi Home Loan?  (Read 579 times)

Huskerfan

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Refi Home Loan?
« on: March 04, 2020, 07:55:30 AM »
Question.  Current loan is 3.5% for. 30 year loan that we got in 2012. $175k house.  We’ve been dumping money into the principal, and we are at $75k left. 

Plans are to finish paying off in 3-4 years.  But with the mortgage interest rates being so low, is it worth looking into Refi that balance for 30 years?  Wouldn’t it allow less interest to be paid and we simply get to pay it off quicker by still applying same payments, but now more going to the principal

Sibley

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Re: Refi Home Loan?
« Reply #1 on: March 04, 2020, 08:11:30 AM »
You'd have to crunch the numbers. Don't forget to factor in points, fees, etc. Your balance is low enough that you might actually have a harder time getting a bank to do it, so it might be a moot point. Alternatively, you might be able to do cash out to increase the total balance, then hang on to that cash for a bit and turn around and use it to pay down the loan. Again, crunch the numbers.

I'm going to look into a refi. My balance and rate are a bit higher than yours. We'll see if the numbers make sense to do it.

six-car-habit

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Re: Refi Home Loan?
« Reply #2 on: March 04, 2020, 11:13:19 AM »
 I haven't looked at home interest rates lately , and the FED just lowered their base interest rate by 1/2% .
     But still 3.5% is pretty darn low, I can't imagine you'll get a loan at 2% or less. My vote is No.  Will be a headache in time / paperwork / etc, plus fees / points / appraisals, etc.   
 Just be happy its at 3.5% compared to many here who paid 7% and more historically.  Keep paying extra principal.

 I can't imagine you'll pay more than $4000 in interest in the next three years , bringing a balance of $75K to zero @ 3.5% . And even if you get a 2% loan , you'll still pay interest to the tune of a couple thousand dollars [plus the origination fees ] .  Seems like a lot of angst , going thru the loan process again , to save $500 or so...

Bernard

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Re: Refi Home Loan?
« Reply #3 on: March 04, 2020, 06:57:11 PM »
I have a 30-year mortgage at 4%, on which I have about $485K left. Monthly P&I is about $2,350. Just a few days ago I contacted my mortgage broker to inquire and he ran the numbers. At 3.25%, which is totally within reach, I'll save about $250 per month, so $3K per year, which I think is absolutely worth it. There are "voices" predicting even lower mortgage rates within this year, and at 3%, we are at a historic low, and it would be crazy not to take advantage of this . . . unless you only have a few years left to pay it off.

Alternatepriorities

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Re: Refi Home Loan?
« Reply #4 on: March 04, 2020, 07:10:42 PM »
ROM guess? It's not going to be worth it worth it for you. Why? Very roughly 75k*1% = $750 a year in savings. Paying it off in 4 years you'd really only pay maybe 2.5 times that over the remaining life of the loan... So even if you could find a 2.5% rate you'd need the closing cost to be under 2k for it to pencil out. That seems pretty unlikely.

If you want to compare actual numbers I shared a spread sheet over on the rule of thumb question thread:

https://forum.mrmoneymustache.com/real-estate-and-landlording/is-there-a-rule-of-thumb-for-when-it-makes-sense-to-refinance/msg2573866/#msg2573866

Alternatepriorities

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Re: Refi Home Loan?
« Reply #5 on: March 04, 2020, 07:17:37 PM »
I may have spoken too soon. Following Duke03's link on the other thread:

https://www.rbfcu.org/rates

It appears if you can join that credit union you could refinance to a 5 year loan at 2.2% which might actually save you a small amount...