Author Topic: Worth it to Refinance?  (Read 2285 times)

Broadway2019

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Worth it to Refinance?
« on: May 25, 2017, 08:20:24 AM »
My fiance and I bought a home in January 2017, however, only had 5% down and had to pay PMI. I am coming into some money from another house sale in July 2017 -
 around $60k total.  Our current mortgage is at $347,000, 3.5% for 20 years, and we pay $193 for PMI a month.

If I refinance and put down 20% of appraisal value (which I estimate to be $380-390k), we would pay $304,000, 3.125% for 15 years, and no PMI or we could do 3.625% for 20 years and no PMI.

My question is would it be worth it if we only lived in the house for 10 years? Also, if we have other debt, does it make sense to put more money into the mortgage? Other debt:

Student Loan - $45k w/ variable rate at 3.8% - I could refinance to fixed rate at 4%
Car Loan - Original $36k, currently $26k w/ 2.24% rate - I am selling for a cheaper vehicle, however, do not have cash to buy
Credit Card - $10k at 0% until July 2018 - will pay as I can

frugaliknowit

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Re: Worth it to Refinance?
« Reply #1 on: May 25, 2017, 10:24:49 AM »
Step 1:  Contact your mortgage lender to find out the particulars of getting out of PMI.  You should not have to refinance to get out of it. 

Broadway2019

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Re: Worth it to Refinance?
« Reply #2 on: May 25, 2017, 10:33:05 AM »
Step 1:  Contact your mortgage lender to find out the particulars of getting out of PMI.  You should not have to refinance to get out of it.

Hi, thank you for responding. I do not have to refinance to get out of it, however, they want to do another appraisal so it's $450 anyways. This other company since its all online has $0 fees and pays the title  etc. - everything except the appraisal. So $450 out of pocket either way. I thought refinancing would be easier since the current lender has no reason to appraise the house higher if it does, it loses PMI. The new lender is eager to get our business so thinking they will be better to work with.

Also, strongly considering the 15 year mortgage which is .375% less and would shave off 5 years. However, that would be make us owe a small amount more a month out on top of the other debts. Also, I was trying to find a good calculator to model this out, but have been unsuccessful. Most do not compare the options well.

« Last Edit: May 25, 2017, 10:35:09 AM by kwarden13 »

Broadway2019

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Re: Worth it to Refinance?
« Reply #3 on: May 25, 2017, 11:01:47 AM »
Scenarios I just calculated...


frugaliknowit

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Re: Worth it to Refinance?
« Reply #4 on: May 25, 2017, 11:12:17 AM »
This other company since its all online has $0 fees and pays the title  etc. - everything except the appraisal...

While I COULD be wrong, no one does a mortgage for free...unless they build the costs into the rate, which it sounds like they are NOT, at least based on the rates you are showing.  Refinance at the low rates you have in mind should cost ~2%.  Much more than an appraisal.

Broadway2019

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Re: Worth it to Refinance?
« Reply #5 on: May 25, 2017, 11:13:17 AM »
This other company since its all online has $0 fees and pays the title  etc. - everything except the appraisal...

While I COULD be wrong, no one does a mortgage for free...unless they build the costs into the rate, which it sounds like they are NOT, at least based on the rates you are showing.  Refinance at the low rates you have in mind should cost ~2%.  Much more than an appraisal.

I already got a quote and from what they told me the 15 years mortgage has a $2500 rebate which is used to cover the title and other fees. They would give me a rate of 3% vs. the 3.125% if I do not want the rebate.

clarkfan1979

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Re: Worth it to Refinance?
« Reply #6 on: May 25, 2017, 09:54:15 PM »
I would put the 60K toward the mortgage and not refinance.

You pay off the loan quickest with re-fi #1, but that's because your payments are the highest.

Once the PMI is paid off with your current loan, the payments are going to be $300 lower than the re-fi #1 option.

Broadway2019

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Re: Worth it to Refinance?
« Reply #7 on: May 26, 2017, 05:49:59 AM »
I would put the 60K toward the mortgage and not refinance.

You pay off the loan quickest with re-fi #1, but that's because your payments are the highest.

Once the PMI is paid off with your current loan, the payments are going to be $300 lower than the re-fi #1 option.

Even with my other debt, would you refinance if you had to give the whole $60k? Just wondering, in case, my appraisal comes back lower and I have to give more. Also, have an experience with getting rid of PMI early at major banks?