Topic 'Re: Refinance mortgage after first year?' in forum 'General Questions' - dslreports.com

Re: Refinance mortgage after first year?

Wed, 21 Nov 2012 13:50:43 EDT

Bob posted : You can finance the closing costs.

Re: Refinance mortgage after first year?

Wed, 21 Nov 2012 13:21:25 EDT

FBM posted :

said by FBM
You can most always get no closing costs, it just costs about 1/8-1/4 % more on the rate.

Well then its not free then is it??? And that 1/4% per payment can add up to big money on a 30 year or even 15 year loan.

May work out as less money per month and more principal before but not free, and it was the last year or two before the bubble burst... and they knew they had too or you'd jump ship.

Again my mortgage company came to me for much lower rate and no closing cost so I wouldn't go elsewhere... not slightly higher cost if I don't want to pay... plane zero closing... again no one is doing that anymore.

I never said "free". I said "no closing costs". Meaning no money out of my pocket, so I don't have to worry about the break even period and I can always look for a better deal if rates continue to fall. If I knew I was going to have my home for the entire length of the loan then yes, that small percentage point may make it worth it to pay closing costs, but as long as that is an unknown i'd rather not pay out of pocket to refinance.

Re: Refinance mortgage after first year?

Tue, 20 Nov 2012 07:52:11 EDT

Draiman posted :

said by talz13:

Yeah, I think I'll just stick with what I have now, and make extra payments on the principle when I can afford to do so.

If you can go from 4% to 3.4% do it. Setup the new mortgage to be paid on a bi-weekly schedule. Your new loan will be a 25 year note. The refi costs should be around $2,000 in Ohio. You could even get a no closing cost loan which adds .25% to give you the money for closing so you refi your $140,000 at 4% into a $140,000 at 3.65%. You pay zero out of pocket yet you save money from day one. It makes no sense to keep what you have. I refinanced from 4.25% to 3.8% 3 months ago and I'll be refinancing again in January 2013 to 3.4%. That's no closing costs so all I do is sign the paperwork, pay nothing, and my mortgage amount stays the exact same as only my rate goes down. It's a no brainer!

I own 4 properties right now of which 3 are rentals. I didn't get here by wasting money either. When there's a penny to be made you go take it. Don't sit back and let it slip away!

"Is no-closing-cost mortgage for you?"
»www.bankrate.com/finance/mortgag···you.aspx
--
IF YOU FIND ANY MISTAKES IN MY WORK...Please consider that they are there for a purpose. I try to please everyone and there is always someone looking for mistakes!

Re: Refinance mortgage after first year?

Tue, 20 Nov 2012 07:44:25 EDT

Draiman posted :

said by netboy34:

I've always heard that if the difference is less than 1%, it is not worth it after closing costs.

Actually it's .5% but even .25% could be viable it all depends on how long you plan to be in the place. Most people stick to about .5% since that's normally around a 5 year ROI on the refi.
--
IF YOU FIND ANY MISTAKES IN MY WORK...Please consider that they are there for a purpose. I try to please everyone and there is always someone looking for mistakes!

Re: Refinance mortgage after first year?

Tue, 20 Nov 2012 01:56:37 EDT

Hayward posted :

said by FBM
You can most always get no closing costs, it just costs about 1/8-1/4 % more on the rate.

Re: Refinance mortgage after first year?

Sat, 17 Nov 2012 16:15:55 EDT

FBM posted :

said by Hayward:

Guess no one is doing closing cost free now though so that does make a diffrence.

You can most always get no closing costs, it just costs about 1/8-1/4 % more on the rate. Just ask a broker specifically for the rate on a no cost refinance. I just refinanced last month for the 4th time over 9 years, each time with no money out of my pocket. It's a no brainer to me if I can get a lower rate because the break even is 0 months. Also I keep my payment at the same amount so more is going into principal at the lower rate. As a result my original 30 year loan now has 14 years left instead of 21, and will continue to drop since I am paying extra.

Re: Refinance mortgage after first year?

Sat, 17 Nov 2012 02:58:29 EDT

Hayward posted : They only time I have done a refi was pre bubble burst, when rates dropping and knew people likely to jump ship, so it same bank was closing close free at reduced rate and also switched from 30 year to 15 year.

Depending on how heavily mortgaged you are the dropping from 30 to 15 year may not be that big a payment increase with reduced interest rate.

Guess no one is doing closing cost free now though so that does make a diffrence.
--

Re: Refinance mortgage after first year?

Fri, 16 Nov 2012 21:51:12 EDT

dcurrey posted : Chances are it wont last 30 years anyway. What is the average time someones stays in same house. Was like 5 -8 years. Now days maybe longer but I am betting not 30 years.

Bank called me this week also wanting me to refinance. Offered me 1% rate drop no closing cost. Guess they need to sale my mortgage to FannieMae again.

.

Re: Refinance mortgage after first year?

Fri, 16 Nov 2012 20:15:35 EDT

tcope posted : I don't think you factored in another years worth of payment. You have 29 years left on this loan. If you refi for 30 years you would be paying an extra years worth of interest.

This assumes that you keep your home for 30 years.

Re: Refinance mortgage after first year?

Fri, 16 Nov 2012 08:10:29 EDT

talz13 posted : Yeah, I think I'll just stick with what I have now, and make extra payments on the principle when I can afford to do so.

Re: Refinance mortgage after first year?

Thu, 15 Nov 2012 20:08:56 EDT

CylonRed posted : All depends on how much the refi would cost vs the savings per month. If you can save the cost of the refi in a few months or a year - might be worth it. 46 months - almost 4 years to recoup the costs - not worth the hassle.

quote:
and look at their mortgage refinance calculator, it asks me how much $$$ down?

Should not be in the equation for a refi - there is no new down and if they wanted to know the equity then they would have a line that says equity.
--
Brian

"It drops into your stomach like a Abrams's tank.... driven by Rosanne Barr..." A. Bourdain

Re: Refinance mortgage after first year?

Thu, 15 Nov 2012 16:08:19 EDT

carp posted :

said by guppy_fish:

said by jack b:

If you can swing the higher monthly payment switch to a 15 year loan and save a ton of interest money.

No need to refi to do that, simply calculate the amount due for a 15 vs 30 year and include that as extra Principal every month in your current mortgage payment ... No need to refi and its additional costs

The extra $$ in the current payment also gives you the flexibility, if you for some reason can't swing the higher payment, you not going to go into default .. its a win win

Exactly what I do. If I can keep it up at my current pace I will avoid ~$200K in interest.

Re: Refinance mortgage after first year?

Thu, 15 Nov 2012 15:45:00 EDT

guppy_fish posted :

said by jack b:

If you can swing the higher monthly payment switch to a 15 year loan and save a ton of interest money.

Re: Refinance mortgage after first year?

Thu, 15 Nov 2012 15:15:04 EDT

workablob posted : I was almost 3 years into a 30 yr at 8.5% in 2003 and refinanced.

I got a 15 year 4.8% and my monthly payments stayed the same essentially.

Woot.

For that small a percentage change I would pass.

Dave
--
I may have been born yesterday. But it wasn't at night.

Re: Refinance mortgage after first year?

Thu, 15 Nov 2012 15:09:44 EDT

jack b posted : If you can swing the higher monthly payment switch to a 15 year loan and save a ton of interest money.

Re: Refinance mortgage after first year?

Thu, 15 Nov 2012 14:37:44 EDT

carp posted : Play with an amortization calculator and see how much you save by paying extra on your principal. »www.hsh.com/calc-amort.html

You can save your self 25,000 just by paying 100 extra on your principal. your refinance saves barely 7K before closing costs.

Re: Refinance mortgage after first year?

Thu, 15 Nov 2012 14:35:10 EDT

n1zuk posted : $3000 is pretty steep for a refi, if you have good (700+) FICO score. Half of that (or so) is more reasonable. (Closing costs are much lower on refi, less people have their hand out).

Payback of refi cost should usually be more like 16-18 months, for it to be a good deal.

The 1% rule is pretty universal, though it depends on financed amount, current interest rates, and closing costs.
--
Smoke 'em if you got 'em

Re: Refinance mortgage after first year?

Thu, 15 Nov 2012 14:11:53 EDT

talz13 posted : I did some more figuring on bankrate's calculator...

Figuring 3.34% for the new rate for 30 year, and a guesstimate of $3000 in closing costs (no earthly idea on that number though) give me a recoup time of almost 4 years, with $15k in interest savings.

New monthly payment: $ 617.10
Monthly savings: $ 64.65
Difference in interest: $ 15094.61

Total cost: $ 3000.00
Months to recoup costs: 46.40

Now it has me thinking, if I'm paying less in interest, that's less deduction on my taxes... Well I have a few appointments with some CPA's over the next week, I guess I'll add this on to my list of questions!

Re: Refinance mortgage after first year?

Thu, 15 Nov 2012 14:06:30 EDT

netboy34 posted : I've always heard that if the difference is less than 1%, it is not worth it after closing costs.

Refinance mortgage after first year?

Thu, 15 Nov 2012 14:00:18 EDT

talz13 posted : I just bought my first house 1 year ago, 30 year mortgage at 4%, and now interest rates have continued to drop... I read a news headline today that rates are down to 3.34% for 30 years. How can I figure out if refinancing is a good idea, if it would save me any money, and if so, how much?

The mortgage is only down to $140k from about $143k when I originated it. When I go to bankrate.com and look at their mortgage refinance calculator, it asks me how much $$$ down? Do they mean how much % equity do I have in the house already, or do they want ANOTHER 20% down?