Author Topic: SHOULD I REFINANCE?  (Read 490 times)

CarnivoreforLife

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SHOULD I REFINANCE?
« on: September 16, 2020, 01:45:11 PM »
Hello! long time lurker have an important question. Please help!

I would like to refinance my mortgage- 5 years into the loan, 25 years left- currently is $122,000 balance 4% . total pmt $1023.00.
Bank offer 2.75% 15 yrs at $862 a month
                3.00% 20 yrs at $704 a month

Closing cost is $3,000 and they said it can be rollover into the mortgage, making it $125,000.  is this a good deal?

thank you in advance for your help!

Goldy

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Re: SHOULD I REFINANCE?
« Reply #1 on: September 16, 2020, 07:27:54 PM »
Are you planning to stay in that house for a long time?

Those rates are ok but not great.  Aimloan has 30yr at 3% and closing costs of ~3k, Iím sure there are banks who can beat them too.  Iíd keep looking.

Because the difference in interest rate is so small between these various loans Iíd recommend getting a 30yr note and simply paying extra to pay it like a 15yr.  That way if something unexpected comes up you can cut expenditure by ratcheting back the overpayment and just go back to the standard 30yr payment.

BDJ_AG

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Re: SHOULD I REFINANCE?
« Reply #2 on: September 16, 2020, 10:24:44 PM »
First off, the monthly costs for the 2 scenarios provided donít check out when plugged into a mortgage calculator so make sure you are back checking any numbers provided by your bank. Secondly, is the $3k closing cost, a complete number including title, survey, and other fees or just the banks fees?

I agree with Goldy, the question has to be answered as to how long you plan to stay in your house and then it is just an equation from there to determine if it is worthwhile. For example:

$125k for 15 years at 2.75% = $848/mo. For a savings from your current mortgage $1023 - $848 = $175/mo. If your closing costs really are $3k then the payback is $3,000/$175 = roughly 17 months.

I also agree with Goldy on looking for a better rate. I closed on my refinance 6 weeks ago @ 2.576% on a 30-year (no points).

Goldy

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Re: SHOULD I REFINANCE?
« Reply #3 on: September 17, 2020, 05:42:50 AM »


I closed on my refinance 6 weeks ago @ 2.576% on a 30-year (no points).

Do you mind sharing where you found that?  Iím also due to refi out of my 5/1 arm in a few months and that is one of the best rates I have seen so far.  Nice work!

jamesbond007

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Re: SHOULD I REFINANCE?
« Reply #4 on: September 17, 2020, 12:15:00 PM »
My refi has been funded this morning. I closed in at 2.625% with an outstanding mortgage principal of 325,000 with CashCall Mortgage. Closing costs of $995. I am sure you can find better rate than what you posted. What I noticed is that since there are a lot of refi applications, not everybody is keen on refi'ng low balance mortgages. So, you must shop around a bit. But based on your situation, I don't think it is worth it. Do the math and figure out how much interest are you going to pay on the remaining 25 year term and how much total interest are you going to pay with the new terms. If it is going to be lower and your monthly payment is going to be lower, then take in the closing costs and find out how long it takes to breakeven. If you plan to own the house for that amount time, then it might be worth it. In my case, I was saving $300 per month and about $36,000 of total interest so It was a no brainer as I would be breaking even in 3 months on the closing costs.

Beach_Stache

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Re: SHOULD I REFINANCE?
« Reply #5 on: September 17, 2020, 02:04:27 PM »
Generally if you save 1% on the mortgage rate then it's worth it, but the big question is will you be in that house long enough for the breakeven point to hit.  It was mentioned above that it's probably around 17 months, so if you're going to be in the house for that long then it makes sense, if you sell in about 2 years then it may not be worth the hassle.  We had a 3.75% 30 year where we paid down a big chunk over the last 7 years, then refinanced to a 15 year at 2.25%.  We paid points so had a good deal of closing costs, but in our situation it made sense to pay points as it saved a lot over the 15 years, and we plan on staying in this house for at least the next 20 years.

I would also shop around and try to create some competition.  If you can do an "online quote" where your email is sent to a few different contacts, you'll get some bids and you can use the lowest 2 to go back and forth against each other for the best rate.  Kind of like shopping for a new car, if you can get the 2 best rates to try to bid for your competition then you'll probably make out a little better than if you had no competition.  I love using Karl's Mortgage Calculator to see how much each loan would cost in interest over the years based on your figures.  Good luck!

CarnivoreforLife

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Re: SHOULD I REFINANCE?
« Reply #6 on: September 17, 2020, 06:22:55 PM »
Thank you everyone for your response!!

I shopped around some more and got 2.75% 30 yrs with $1,200 closing!  New PI is only $508!

MishMash

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Re: SHOULD I REFINANCE?
« Reply #7 on: September 18, 2020, 06:04:03 AM »
Thank you everyone for your response!!

I shopped around some more and got 2.75% 30 yrs with $1,200 closing!  New PI is only $508!

Hrm...lenders here in FL are all 2.75 and up to 3.1 on a 15 year, I thought I found a good deal with 2.45 on a 15!

Goldy

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Re: SHOULD I REFINANCE?
« Reply #8 on: September 18, 2020, 06:32:43 AM »
Thank you everyone for your response!!

I shopped around some more and got 2.75% 30 yrs with $1,200 closing!  New PI is only $508!

Nice one!  Where did you find that?

CarnivoreforLife

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Re: SHOULD I REFINANCE?
« Reply #9 on: September 18, 2020, 02:59:11 PM »
Thank you everyone for your response!!

I shopped around some more and got 2.75% 30 yrs with $1,200 closing!  New PI is only $508!

Nice one!  Where did you find that?

CHASE!