Author Topic: Should I refinance or not? What would you do?  (Read 3858 times)

FIREdancer

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Should I refinance or not? What would you do?
« on: July 25, 2016, 05:57:04 PM »
Information about current loan:
Amount left: $102,000
Term: 28 years left on 30 year
Rate: 4.125%
Monthly Principle/Interest Payment: $531

Refinance estimates:
Loan amount: $102,000
Term: 15 year
Rate: 3-3.625%  (Hoping closer to 3% considering my excellent credit score)
Estimated closing costs: $2900
Estimated monthly payment: $735

At my current rate (4.125%), I feel like I'm right on the edge of if it's better to pay down the principle or invest my excess cash.  So by refinancing, I'd be saving a bunch of interest in the long run, but I don't know if it's worth it, because I'd have to divert a portion of retirement savings towards the increased monthly payment on a 15 year.  Opinions?

brotatochip

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Re: Should I refinance or not? What would you do?
« Reply #1 on: July 25, 2016, 06:13:42 PM »
I'm assuming you have at least 20% equity to avoid PMI.  You should be able to get a better rate on a 15 year refi.  I just closed om a 15 year refi at 2.63% with closing cost rolled into the mortgage.  I can't wait to outright own my home and divert all that cash to my taxable accounts...so I would vote to go for it! 

FIREdancer

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Re: Should I refinance or not? What would you do?
« Reply #2 on: July 26, 2016, 07:08:52 AM »
Hi brotatochip, I have over 20% equity, so that's no problem.  So far, I've only checked with my current mortgage company which is Nationstar, so I should shop around.  Do you mind if I ask where you got 2.63%?

Another Reader

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Re: Should I refinance or not? What would you do?
« Reply #3 on: July 26, 2016, 07:21:50 AM »
NEVER use Nationstar/Greenlight.  The rates and fees will be among the highest around.  The service is awful.  The best pricing will usually be found in one of the high volume on-line companies.  Try Aimloan.com, one of the cheapest out there.  If you are a "cookie cutter borrower," with W-2 income, uncomplicated finances, and a good credit score, you should sail through their loan process.  Input your information and look at the options they offer.

FIREdancer

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Re: Should I refinance or not? What would you do?
« Reply #4 on: July 26, 2016, 07:55:07 AM »
Thanks for the tip, Another Reader.  I got my original loan through a local bank, and the bank sold it to Nationstar, so I didn't pick them.  But I will take a look at Aimloan.com.  Thanks!

Another Reader

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Re: Should I refinance or not? What would you do?
« Reply #5 on: July 26, 2016, 08:42:51 AM »
Your current servicer is almost never the best deal.  Nationstar will bombard you with solicitations.  I got stuck with them as well.  They have spent a couple hundred dollars on Fed-ex letters, first class letters, and other promotional material trying to get me to refinance a loan that was refinanced already under HARP.  The current rate cannot be duplicated because this is a rental, and they cannot refinance it anyway, because I am way over the Fannie/Freddie loan limit.  Opt out if you can, but I haven't been successful in stopping the deluge of garbage yet.

boarder42

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Re: Should I refinance or not? What would you do?
« Reply #6 on: July 26, 2016, 08:54:47 AM »
yeah thats a crazy high rate.  i'm REFI'ing to a 30 year at 3.25% you hsould be in the 2's on a 15 though

to answer your question though YES REFI ... i personally would keep the 30 year but on such a small loan its not a huge deal.

FIREdancer

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Re: Should I refinance or not? What would you do?
« Reply #7 on: July 26, 2016, 09:30:56 AM »
Just checked with my local bank that did my original loan and their 15 year is currently 2.875% and $1800 estimated closing costs...that's quite a bit better than Nationstar and similar to the estimates from aimloan.com.  Thanks again for the responses everyone!

Also, just curious: for those of you who have done a lot of home loans and refinancing, do you  prefer online companies or local brick and mortar places?  I tend to like using my local bank because they sometimes give me credits and things for being a longtime customer, but I suppose online companies might have better rates or lower fees.

boarder42

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Re: Should I refinance or not? What would you do?
« Reply #8 on: July 26, 2016, 09:50:31 AM »
i REFI with whoever gives me the lowest no cost rate.  My mortgage broker in the MO/KS area would likely be at 2.875% for no cost on a 15 year right now.

frugaliknowit

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Re: Should I refinance or not? What would you do?
« Reply #9 on: July 26, 2016, 10:09:59 AM »
It depends on how long you are planning to remain in the property.  Once you find your best deal, calculate the break even date by seeing when the cost of the fees is offset by the interest savings.  Best of luck!

boarder42

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Re: Should I refinance or not? What would you do?
« Reply #10 on: July 26, 2016, 10:22:38 AM »
It depends on how long you are planning to remain in the property.  Once you find your best deal, calculate the break even date by seeing when the cost of the fees is offset by the interest savings.  Best of luck!

so that breakeven date applies assuming you end up not taking out a new mortgage.  if you always plan to be in a home with a mortgage and you plan to be on 30 year loans you'll come out ahead.

mozar

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Re: Should I refinance or not? What would you do?
« Reply #11 on: July 26, 2016, 11:28:30 AM »
I can't remember exactly what happened but I was quoted a low rate and then they came back and said that they couldn't give it to me because I was only refinancing 100k. So just know that there may be cut offs for certain amounts.
I did bb&t refinance  for 100k, 3.5%.  Originally was 5.1%.

chesebert

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Re: Should I refinance or not? What would you do?
« Reply #12 on: July 26, 2016, 01:00:56 PM »
I will also look at Aimloan.com for my prospective refi. Any other internet outlets I should be looking at?

Greenstache

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Re: Should I refinance or not? What would you do?
« Reply #13 on: July 26, 2016, 01:05:44 PM »
Check out the rates on Zillow, through their refinance page.  I've refinanced various properties using lenders I've found there.  I usually sift through a few of the most competitive quotes to start out and then end up finding one I like - never had any issues with closing on time and the rates have been consistently much better than those of local banks.

aboatguy

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Re: Should I refinance or not? What would you do?
« Reply #14 on: July 26, 2016, 01:11:20 PM »
Agree with the others your interest rate is too high.  Just closed on a 30 year refi on Saturday @ 3.125 (it was a VA refi on a recent VA refi, I'll recoup my costs in less than 7 payments)

Mike

FIREdancer

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Re: Should I refinance or not? What would you do?
« Reply #15 on: July 26, 2016, 02:10:05 PM »
It depends on how long you are planning to remain in the property.  Once you find your best deal, calculate the break even date by seeing when the cost of the fees is offset by the interest savings.  Best of luck!

Since I'm shortening the term some online calculators say they can't compute the break even point and one said the break even point was negative 1 year, which doesn't make sense.  So I just estimated using amortization tables, and I think my break even point is between 1 and 2 years and I plan to stay in the house for the foreseeable future, so that sounds like a win.  Thanks!

brotatochip

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Re: Should I refinance or not? What would you do?
« Reply #16 on: July 26, 2016, 04:05:45 PM »
Hi brotatochip, I have over 20% equity, so that's no problem.  So far, I've only checked with my current mortgage company which is Nationstar, so I should shop around.  Do you mind if I ask where you got 2.63%?

Northwest Federal Credit Union.  They are based out of Virginia and have excellent customer service.  Everything was online and smooth as could be.  I had to open a savings account with them though to be eligible, but it was not a hassle at all...$10 minimum in the savings account.

Tjat

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Re: Should I refinance or not? What would you do?
« Reply #17 on: July 26, 2016, 04:42:13 PM »
Tooting my own horn a bit, but the below link leads to a tool and thread that should answer your question.

http://forum.mrmoneymustache.com/investor-alley/one-man's-analysis-of-'to-mortgage-or-invest'/

Mother Fussbudget

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Re: Should I refinance or not? What would you do?
« Reply #18 on: July 26, 2016, 06:11:41 PM »
Namaste, FIREdancer! 
Check out this link - several mustachians have borrowed / refi'd through PenFed.  All on-line.  No hassle.  WYSIWYG.
https://www.penfed.org/15-Year-Fixed-Conforming-Mortgage/

In the final analysis, it's up to you.  It sounds like you're doing good thinking, but listen to the spreadsheets, not emotions.  Unless you're not sleeping at night over this issue... then do the right thing to help you sleep.

All the best! ;-)

FIREdancer

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Re: Should I refinance or not? What would you do?
« Reply #19 on: July 27, 2016, 01:10:00 PM »
Thank you all for the advice and opinions!  I have decided to go through with the refinance.  I checked with several different lenders including those you all have suggested and have decided to go with my local bank again.  They had the the second lowest rate, but said they would match a competing rate and closing costs, and they were great to work with on my original loan, very hassle-free, so I'm pleased with my choice.  Thanks again for the support, Mustachians!