Author Topic: Thoughts on a Refinance  (Read 1645 times)

drtownhouse

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Thoughts on a Refinance
« on: January 14, 2015, 09:36:28 AM »
My situation has improved quite a bit since I bought my house. When I bought the house my income was $76,500 and my wife was a stay at home mom. The interest rate we got was 4.625%.

Today, I earn $100,000 and my wife about $50,000. We have $200,000 left on our loan and about $57,000 in equity. I plugged our numbers into online calculators and was getting rates around 4.0%. Since then, I called 3 banks and got the following quotes (these are all big national institutions).

Bank A: Current bank. Offers 3.9% with $3,000 in fees. We would save $69 in P+I every month with this offer.
Bank B: Offers 3.875% with $2,253 in fees. Monthly reduced in P+I = 91
Bank C: Offers 4.0%. Fees are listed as ($35), which to me seems to be a $35 credit. Save $81 in P+I every month.

Bank C seems to be the best choice. Significantly lower rate with no upfront costs. That raises some questions:

1) For those who have refinanced, are there other fees that for some reason are not listed with the fees in your quote that might make the whole thing not worth it?

2) My wife just started school. She will probably have to reduce her work hours such that she would gross about $30k per year. She may have to do this in 30 days. Could that derail this and make it not worth it? If we move really fast, how quickly might we finish the process?

3) Bank C seems pretty good. Is there any reason to believe we might be able to get significantly lower rates, or would people generally be happy with this kind of rate reduction?

4) How much leeway do the lenders have for negotiation. I want to tell bank C to lower their rate by 10 basis points with no effect on fees. Are such requests unreasonable?

5) Any other considerations?

Thank you.

frugaliknowit

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Re: Thoughts on a Refinance
« Reply #1 on: January 14, 2015, 01:56:33 PM »
I prefer offer "C".  Almost no cost is preferable, since there's really no variables to deal with.

Answers to questions:

1.  Get a good faith estimate from the lender in writing/email/pdf.  No, there should be no significant surprises.
2.  The lender will want W2's for the last couple of years.  If your wife's (higher income) is needed to qualify for the loan (doesn't sound like it), this could be significant.  I believe as long as she's still working at the higher pay before the loan is approved, you will be ok.  You can just be honest with the person you deal with at the bank.
3.  You could look for a lower rate "no cost".  You won't find a lot of them around.
4.  I do not think you can negotiate, but you can try.
5.  Will the house appraise OK for 80% Loan to value or lower?

Good luck!!

drtownhouse

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Re: Thoughts on a Refinance
« Reply #2 on: January 14, 2015, 05:04:43 PM »
Thanks for the feedback.

1) Getting GFE
2) I actually asked them. I was surprised to hear they were not interested in my wife's income. That's good.
3) Credit  Union D gav me 3.99% with no cost. Guess that's as good as it will get. Beats my current rate.
5) Yes.

thanks again!

mozar

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Re: Thoughts on a Refinance
« Reply #3 on: January 14, 2015, 07:33:16 PM »
Why are the rates so high? Are you refinancing from 30 year to 30 year? What about going to 15 year? How long do you plan on staying?