Author Topic: refi within first year  (Read 316 times)

jonoliver

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refi within first year
« on: November 20, 2020, 09:39:49 AM »
Hello Mustachians,

Looking for advice on a potential refi. We bought end of last year, 30yr conventional at 3.75% w/ 5% down.

Spoke with our lender and they said we could lower our monthly payment by $150 with a refi at 2.875%. This would be with the closing costs rolled into the loan.

When I asked how much closing would cost he said he didnt have the info right in front of him - so that's a little suspicious, but am still curious if the additional monthly savings would be worth it to pay the closing costs up front.

Since we're in the first year of the original loan, that eliminates/minimizes the main downsides of refi: 1. we'd only be adding 10 months to our total loan time 2. no plans to move anytime soon.

So, it *seems* like this is a free $150/month, but i know there is no such thing as a free lunch, but cant tell where any downside would be other than we would be paying closing costs twice in one year. (But I have no regrets, couldn't imagine being quarantined in our old apartment).

We are prioritizing monthly cashflow more as we're moving to 1 income, so i dont think i'd want to switch to 25 or 20 yr either.

Does this sound like a good idea to refi? Am I missing anything in my considerations?

skuzuker28

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Re: refi within first year
« Reply #1 on: November 20, 2020, 10:20:53 AM »
Closing costs ALWAYS matter, rolled into the loan or not.  You need to know what those are so you can shop around, 2.875% is pretty typical at this moment.

I say yes to refinancing in general, but not necessarily with your current lender.  Have you looked at other options?

jonoliver

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Re: refi within first year
« Reply #2 on: November 20, 2020, 10:38:52 AM »
Closing costs ALWAYS matter, rolled into the loan or not.  You need to know what those are so you can shop around, 2.875% is pretty typical at this moment.

I say yes to refinancing in general, but not necessarily with your current lender.  Have you looked at other options?

Thanks for the feedback there- that's what I was thinking I'd need to do.

How do I go about shopping around for this? I know I could call my credit union, but other than that I'm not sure what else.

skuzuker28

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Re: refi within first year
« Reply #3 on: November 20, 2020, 10:44:37 AM »
For a ballpark you can go to LenderFi.com and get a quick quote.  If you are a Costco member they also have a mortgage brokerage program.

For myself, I've done two refinances with First Internet Bank.  The second is closing next Tuesday.

JLee

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Re: refi within first year
« Reply #4 on: November 20, 2020, 10:47:13 AM »
I refinanced twice in the last 18 months.  Purchase at 3.5% in June 2019, refi to 3.25% in March 2020, and 2.5% in Oct 2020. Consider the whole financial picture (including closing costs/fees) when doing the math, not just the rate.