Refinancing Question
kag426
8 years ago
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bry911
8 years agokudzu9
8 years agoRelated Discussions
Refinancing - numbers making my head spin!
Comments (13)I read the exchange above a few weeks ago and it stuck in my mind because I've been thinking maybe we should refinance (again). We refinanced three and a half years ago to a 30-year mortgage at 6.125%. Rates are so much lower right now that I keep wondering if it would be worthwhile to take advantage of them. However, every time I do the calculations, it does not seem worth it. For example, I just did them again, using a plan offered by ING as comparison to what we have: 2.990% for five years, based on a 30-year amortization, with the balance due after five years. Compared with keeping our current mortgage, the overall savings (i.e., the balance at the end of five years minus the closing costs -- which are low right now because they have an offer going of discounting $2,000 from closing costs) would be a bit less than $4,000. Rates any higher than the 2.99% (e.g., if we went with a straight 30-year mortgage from a bank) would yield even less in savings. The ING mortgage would be about $350 less per month than what we're paying now. But I think overall, taking tax deductions, closing costs, and all the rest into consideration, it would be more or less a wash, right? Plus, a plan like the one offered by ING forces you to either pay off or refinance after five years, whereas with our 30-year mortgage, we have the security of a stable payment that is really fairly low. We have no other debts, btw, and are putting the max into retirement accounts. We live on about a third of our gross income....See More1 last refinancing question....for now!!
Comments (14)For those who didn't follow the other thread, you aren't just trying for a traditional refinancing. You are trying to take advantage of one of the government programs. The program is specifically designed to help homeowners refinance on more favorable terms so they can stay in the home. Rental properties are strictly prohibited in the program. You are trying to skirt the law and take advantage of some "free" money from the government and are speculating that you will be able to make money as the condo market improves. Frankly, oversight of most of these government initiatives is virtually non-existent, so you probably would be able to get away with cheating the system. However, you are still trying to cheat the system. You know that your intent is not to use this is a primary residence. Whether the state could prove that in a trial is a question best left to a lawyer, but you know darn well what your plan is. It sounds like you still have a bit of the same mentality that got us into this housing mess to start with - and the bank sounds like it didn't learn a darn thing. The bank should not encourage you to lie on mortgage documents. You should not lie even if a dishonest banker says it is ok. Even more, you should not speculate in the condo market unless you have some serious money to do so. (Planning to own/rent property on small timescale is speculating!) Lots of people just tried this plan and are now facing foreclosure. Count yourself lucky that you are in a position to get out of this place with your shirt still on....See MoreRefinancing after one year
Comments (23)Sorry I have been really busy and although I saw this question I have really not had time to comment until now (thanks to a small case of insomnia). There are generally two types of refi mortgages, and lots of modifiers you can put on them. (1) Typical loans with typical closing costs and (2) no closing cost loans. I will give the pros and cons and an expert opinion on them (and yes I am aware that I am proclaiming myself as an expert.) In either case, it never matters how long you have been in your previous mortgage. How much time you spent in your previous mortgage is a reflection of how good your previous mortgage was and should not be used to consider whether or not to refi, it is the very definition of a sunk cost. First, no closing cost loans. Loans that actually have no closing costs will typically charge a slightly higher interest rate, usually .25 to .5 percent higher depending on your situation. The bank recoups the necessary fees by getting these interest rate premiums. A general rule for no closing cost loans is, if you can get half a percent lower then it is time to refi (worth the trouble). The time in your first loan doesn't matter, you are paying less interest for the same amount of money, with no fee hurdle to overcome and really nor does the time you plan to stay in the house matter. Typically you will have to pay for an appraisal and you may have a few other small fees. If you are following this advice be sure that it really is a no closing cost loan and not a loan with closing costs rolled into the loan. Second, the typical loan with typical closing costs. These loans have a slightly lower interest and charge fees. These fees may be rolled into the loan, so sometimes they look like no closing cost loans. The determining factor on whether or not you should refi with a closing cost loan is how much longer you plan to stay in the house (again note that how long since your last mortgage is not a consideration.) A quarter point interest savings are about $246/per $100,000 financed for the first year and drop by about $8 per year. So if you are going to be in the house even a few years mortgages with closing costs rolled in tend to overtake no closing cost refi's. Now for the modifier. You are asking about a cash out refi. Which I really don't like. Banks will charge you extra for the cash out option. You can avoid the upcharge by taking out a home equity loan now and refinancing both loans in a few months into a regular refinance. I don't know the amount you paid for the house, and if it is low enough it may not be worth the trouble of doing two loans over the next few months. But with the upcharge for cash out, you are essentially paying a decent amount extra in interest on the entire amount to get a 30k extra, if that loan is high enough the extra interest fees tend to turn them into pretty crappy deals....See MoreHelp with construction loan to conventional mortgage refinancing
Comments (20)The adverse market refi fee goes into effect Dec 1 2020 and costs 1/2% of the mortgage at closing. https://www.cnbc.com/2020/09/18/refinancing-a-mortgage-will-cost-more-thanks-to-an-adverse-market-fee.html I also encourage you to shop around but get your application in soon so you don't have that extra 1/2% to pay. Different lenders have different closing costs. Also check into a 25 yr mortgage rather than a 30 year. It saves you thousands on your repayment. You should be able to get closer to 2.25% to 2.5% on a refi with your scores and a new home based on a 30 yr (or 25 yr) amortization. Try Sebonic Financial....See Morepamghatten
8 years agoUser
8 years agokag426
8 years agobry911
8 years agoUser
8 years agolast modified: 8 years ago
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