Author Topic: Refinance?  (Read 1478 times)

FarmerAl

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Refinance?
« on: August 03, 2019, 07:36:05 AM »
I got an email from my mortgage contact yesterday. Mortgage rates are down to 3.10 for 15 year, 3.55 for 20 year, and 3.6 for 30 year.

I locked in 4.25 in March when we got done building our house. I thought that was a great rate at the time since rates had been up to 5% and who thought rates would be this low this fast.

My cost to refinance would be about $1400 because my appraisal is good for another two weeks (6 months total).

Refinancing to a 30 year at 3.6 would save me about $100 per month. The 20 year would be just over $200 more a month than what we pay now.

Is it worth it to refinance now or should I wait to see where rates go from here?

actonyourown

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Re: Refinance?
« Reply #1 on: August 03, 2019, 08:27:28 AM »
I don't own and have never purchased a house, but I follow federal rates.  The Fed dropped the rates 0.25% to 2.25%.  But even if they drop the rates another 1% in the next year or 2, you have spent an extra $1200-$2400 waiting, and I don't think you can reasonably expect mortgage rates to drop below 3% no matter what the fed does.  So my thought is you should go for it now to lock in that lower rate (it is a fixed rate right and not a variable at 3.6%?).  Your savings the first 14 months will be negated with your appraisal costs but for the next 346 payments, it will save you $34,600.  That's pretty significant.

So I guess it comes down to what you are willing to gamble with.

1) You wait; rates drop (probably due to recession fears) a little further to 3%.  What are the odds of this?
2) You wait; rates hold or increase and you miss your chance.  A possibility.  Your mortgage is already decent historically speaking.
3) You take it now.  Rates go up, and you saved yourself some money.  Safe option.
4) You take it now.  Rates go down another 0.25%-0.6%.  You could have saved another $50-$100/month.  Hindsight is 20/20 but you have a historically below average mortgage and took it when you could.

Again my vote is that you take a win when you have one.  That is the simplest and if something changes where you can re-finance again or you got a better deal than what is currently out there.  You should price out each one of these options over 5, 10, 20, and 30 year spans just to give you an idea of what difference it would make.  Best of luck!

Jon Bon

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Re: Refinance?
« Reply #2 on: August 03, 2019, 11:25:34 AM »
PTF

I am at 4.5 with 25 years left. Payment would be Approximately $200 more for 10 less years. Definitely something to think about!

I dont think they are going to go much lower FWIW.


TomTX

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Re: Refinance?
« Reply #3 on: August 03, 2019, 12:03:39 PM »
I'd say do it.

mistymoney

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Re: Refinance?
« Reply #4 on: August 03, 2019, 12:13:56 PM »
PTF

I am at 4.5 with 25 years left. Payment would be Approximately $200 more for 10 less years. Definitely something to think about!

I dont think they are going to go much lower FWIW.

can you define ptf? google did not help....parent teacher conference? property trust fund? I'm not getting it....

Jon Bon

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Re: Refinance?
« Reply #5 on: August 03, 2019, 12:16:46 PM »
Lol see You know how I knew that you posted this question?

Becuase I:

Posted
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mistymoney

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Re: Refinance?
« Reply #6 on: August 03, 2019, 12:22:42 PM »
Lol see You know how I knew that you posted this question?

Becuase I:

Posted
To
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ooooo! thanks!


Telecaster

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Re: Refinance?
« Reply #7 on: August 03, 2019, 12:41:09 PM »
I got an email from my mortgage contact yesterday. Mortgage rates are down to 3.10 for 15 year, 3.55 for 20 year, and 3.6 for 30 year.

I locked in 4.25 in March when we got done building our house. I thought that was a great rate at the time since rates had been up to 5% and who thought rates would be this low this fast.

My cost to refinance would be about $1400 because my appraisal is good for another two weeks (6 months total).

Refinancing to a 30 year at 3.6 would save me about $100 per month. The 20 year would be just over $200 more a month than what we pay now.

Is it worth it to refinance now or should I wait to see where rates go from here?

The number to look at is the interest portion of the payment.  If you are saving $100/month in interest it is probably worth it to refinance. 

Rdy2Fire

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Re: Refinance?
« Reply #8 on: August 03, 2019, 12:53:26 PM »
Years ago the general rule of thumb, or at least what I was told was if you were saving over 1 point it was a no brainer. I am not sure that was ever really true or still applies so

First I'd ask if there is anything they can do to bring that $1400 down. I am not sure what that's for, in this case but, if you are using the same bank they should be able to wave some fees.

Second I'd look at what your new payment would be in regards to how much interest vs principal

Lastly I'd use something like Karls ( https://www.drcalculator.com/mortgage/old/ ) to put in real numbers and get yourself the best option. It might make more sense to take the 30yr mortgage at 3.6% and put the $100 a month on principal then to pay $200 more a month to get 20 year especially if you're adding additional principal periodically.

I used the calculator for years (there is a newer version) to play with my numbers. My goal was to pay off my 30 yeard in 15, 1 year in I went to a 5/1 ARM thinking rates would go down and that took my thinking from 15 years to 12. In the end I paid of my house in 9 yrs 5 months. The numbers don't lie, so plug your into something like that calculator and play with them 

** Edit.. As for waiting, that's a straight up gamble and sounds like you'd have to get another appraisal so that cost needs to be factored in as well as the additional $$ you spend per month waiting
« Last Edit: August 03, 2019, 12:55:23 PM by Rdy2Fire »

YttriumNitrate

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Re: Refinance?
« Reply #9 on: August 03, 2019, 02:13:20 PM »
My rule of thumb for a refi is that I do it if it pays for itself in under two years. You're at just over a year, so go for it.

FarmerAl

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Re: Refinance?
« Reply #10 on: August 03, 2019, 03:54:23 PM »
Thank you all. I am leaning towards refinancing. Are there any downsides to refinancing so soon? Other than the cost and credit getting pulled again.

v8rx7guy

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Re: Refinance?
« Reply #11 on: August 03, 2019, 04:53:28 PM »
Years ago the general rule of thumb, or at least what I was told was if you were saving over 1 point it was a no brainer. I am not sure that was ever really true or still applies

I dont want to get too nit picky, but a point is generally 0.125% .  I think you meant to say if you are saving 1% or more it's a no brainer.

ZMonet

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Re: Refinance?
« Reply #12 on: August 03, 2019, 05:03:45 PM »
AGree with Rdy2Fire that you should look to see if they'll lower the $1400.

An appraisal shouldn't be more than $300, but if I were in your shoes, and I was about 10 years ago, I'd refinance now and refinance again if it makes sense at that later date.  I did both because a 15-year mortgage came down to 2.75%, where I am at now and I suspect where I'll be until I pay it off.

TomTX

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Re: Refinance?
« Reply #13 on: August 03, 2019, 05:23:34 PM »
Thank you all. I am leaning towards refinancing. Are there any downsides to refinancing so soon? Other than the cost and credit getting pulled again.

Consider the option of 30 year, and investing the difference. The compound growth potential of the investment is significant.

Rdy2Fire

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Re: Refinance?
« Reply #14 on: August 04, 2019, 07:32:11 AM »
Years ago the general rule of thumb, or at least what I was told was if you were saving over 1 point it was a no brainer. I am not sure that was ever really true or still applies

Yes

I dont want to get too nit picky, but a point is generally 0.125% .  I think you meant to say if you are saving 1% or more it's a no brainer.

Tuskalusa

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Re: Refinance?
« Reply #15 on: August 04, 2019, 09:24:30 AM »
We have a broker who does refiís for no points and no fees. Im guessing he gets some kind of commission from the banks. Iíd recommend looking for a broker who can waive those fees. Then itís a no-brainer.

Goldy

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Re: Refinance?
« Reply #16 on: August 04, 2019, 09:29:52 AM »
We have a broker who does refiís for no points and no fees. Im guessing he gets some kind of commission from the banks. Iíd recommend looking for a broker who can waive those fees. Then itís a no-brainer.

Usually those loans are just at higher interest rates to cover the lack of fees and points. 

Tuskalusa

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Re: Refinance?
« Reply #17 on: August 04, 2019, 09:34:13 AM »
Thatís not what Iíve experienced. Rates have been competitive with the right broker.

Turkey Leg

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Re: Refinance?
« Reply #18 on: August 04, 2019, 11:45:42 AM »
Lol see You know how I knew that you posted this question?

Becuase I:

Posted
To
Follow

ooooo! thanks!

Please donít use PTF. A better alternative is documented here:

Notify doesn't work.
Actually, it does - or can, given some time. 

Count me as someone who was dubious, but has tried it and is seeing a benefit.

In short, instead of using https://forum.mrmoneymustache.com/unreadreplies/ in a shortcut, try https://forum.mrmoneymustache.com/profile/?area=notification, perhaps with the following settings:


At first it may seem useless - nothing appears.  But as one replies in various threads, they do appear in the "Notify" list and will have the orange "new" button when applicable. 

If one wants to follow a thread without replying, click "NOTIFY" at the top or bottom of the thread page:


And if one wants to stop following a thread, click "UNNOTIFY" at the top or bottom of the thread page:


If this will help forum responsiveness, why not do it?

FarmerAl

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Re: Refinance?
« Reply #19 on: August 04, 2019, 01:10:08 PM »
Got an email back this morning. He can do the refinance for about $1100-$1200.
I emailed another bank I had talked to awhile back to see where they are at.
Will be interesting to see if rates move at all tomorrow.

FarmerAl

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Re: Refinance?
« Reply #20 on: August 07, 2019, 12:34:18 PM »
30 year rate is down to 3.55%. I am going to do the refi. Now do I wait to see if rates go down more, or do it now?

Jon Bon

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Re: Refinance?
« Reply #21 on: August 07, 2019, 12:36:35 PM »
Yeah I am going for it too. 15 years at 3.0% zero points.

legalstache

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Re: Refinance?
« Reply #22 on: August 07, 2019, 05:06:35 PM »
Thanks for making me take another look at refinancing. I'm in a similar boat as you with a 4.25% rate from March. Lender on the current mortgage will refi down to 4% basically for free (or maybe even cash back if they agree to take out the $700 appraisal), or 3.875 for $600 (again, maybe cash back if appraisal goes away). 3.875 would save me $90/mo, so would pay off in ~7 mos even if I had to pay $600 in closing costs.

I'm tempted to stay with my current lender for their good service but should I be shopping around, and if so, where?

ZMonet

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Re: Refinance?
« Reply #23 on: August 08, 2019, 09:54:20 AM »
I'm tempted to stay with my current lender for their good service but should I be shopping around, and if so, where?

I'd take a look at Aimloan.com.  I've used them a few times now between initial financing and two refinances and they've always been great and had the most competitive rates when comparing apples to apples.  They won't hold your hand as much as your local bank, but they do enough.

FarmerAl

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Re: Refinance?
« Reply #24 on: August 08, 2019, 04:38:07 PM »
I locked in the 3.55% today. Closing costs of $1,100. Payback is 9 months.

v8rx7guy

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Re: Refinance?
« Reply #25 on: August 08, 2019, 04:40:56 PM »
I locked in the 3.55% today. Closing costs of $1,100. Payback is 9 months.

30yr or 20yr?

FarmerAl

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Re: Refinance?
« Reply #26 on: August 08, 2019, 08:39:44 PM »
30 year

FarmerAl

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Re: Refinance?
« Reply #27 on: August 08, 2019, 08:40:15 PM »
20 year was 3.5.

SlowAndSteady

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Re: Refinance?
« Reply #28 on: August 10, 2019, 01:01:30 PM »
Awesome - congrats on the locked in savings! 

For others reading who may decide to refinance, donít forget to do what FarmerAl did: shop for rates.  Check a minimum of two banks plus AimLoan.com, and make sure youíre comparing apples to apples.  Check more banks if you have the time/bandwidth. Rate shopping is one of the highest dollar-per-hour personal finance activities that you can possibly pursue.

RedwoodDreams

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Re: Refinance?
« Reply #29 on: August 10, 2019, 05:09:10 PM »
Thanks for starting this discussion. We refinanced in July to a 30 yr / 4% mortgage, but if it can go down to the 3.6% range, it's probably worth pursuing another refinancing. I thought I read something somewhere about there needing to be x months (6?) between refinances. Anyone know if that's true?

I wonder if the appraisal we got and title search stuff we just paid for can be reused as well if used within a certain length of time?

Lastly, we refinanced with our credit union. Is it worth starting with them to see if they'd be willing to lower our rate to keep our business?

TomTX

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Re: Refinance?
« Reply #30 on: August 11, 2019, 07:55:10 AM »
My cashout refi in Texas will prevent me from refinancing again for 12 months.