Refinancing: Worth It?

[Tenspro2002]

Personal finance experts of the BY: is it worthwhile to refinance a mortgage that I just took out last year?

I'm paying 4% interest on a 30-year mortgage right now, but could potentially refi down to 3% (also 30 years) and reduce the monthly payment by $200.

Depending on how long I take to pay it off, I could save somewhere in the ballpark of 25K in interest over about 20 years. Mortgage interest tax deduction isn't likely to be a factor. Closing costs would be 5K.

FWIW, turning 5K into 25K over 20 years is equivalent to a 9% annual return, which seems pretty good.

Should I go for it? Anything seem out of line?

TIA.

 

[Tenspro2002]

Update: we're going ahead with the re-fi from 4% (30 yr) to 2.875% (30 yr). No points.

Closing costs stuck at 5000 (2400 were county taxes/fees -- can't get out of that, 1200 were title-related and lawyer fees, 1400 in fees for the broker). The last one bothers me, but it's still a great deal, probably will save 30K in interest over the 20 years we expect to take to pay it off.

 

[UConnDad]

I’ve been watching this thread. We’re looking to refi a vacation home/rental. Any suggestions for specific lenders?

 

[Tenspro2002]

I’ve been watching this thread. We’re looking to refi a vacation home/rental. Any suggestions for specific lenders?

Nice humble brag

 

[uconnyankee]

I was able to get 2.375% (2.4% APR), on a 15 year...

Getting a little nervous as I'm waiting for everything to go through. Haven't heard much in past couple weeks as broker is pushing through a ton of loans. I check in periodically and am told everything is on schedule.
Like sitting on a plane stuck on the tarmac....

 

[UConnDad]

Nice humble brag

No brag. 45 year blue collar job. Time to enjoy a few years and would be nice to save a couple bucks.

 

[B1GEast]

Call your lender and ask them if you can modify the loan, it's cheaper than refinancing, good luck

 

[HooperScooper]

Call your lender and ask them if you can modify the loan, it's cheaper than refinancing, good luck

I just did that recently with Wells Fargo (my loan was sold to them a long time ago). They still wanted $5000 in closing costs (which they will add on to the loan if you don't want to pay out of pocket) and their rates weren't even close to competitive. I called them back and said I can get a certain rate and the rep on the phone said this is the best we can do, no movement. F them.

 

[Tenspro2002]

I just did that recently with Wells Fargo (my loan was sold to them a long time ago). They still wanted $5000 in closing costs (which they will add on to the loan if you don't want to pay out of pocket) and their rates weren't even close to competitive. I called them back and said I can get a certain rate and the rep on the phone said this is the best we can do, no movement. F them.

This was literally my exact same experience with Wells Fargo.

 

[Mots010]

We refi'd back in March through Costco mortgage services and the experience was positive. I kind of wish we waited as rate are even lower now, but we did get 3.125, down from 4%.

 

[Hey Adrien!]

Four years ago entered a 30 year mortgage at 3.375%. I've been playing around with refinancing, but with our starting rate there's been no reason to justify until we're ready to refi into a 15 year. Mortgage insurance is a pain, though.

 

[auror]

Saw that some of the closing costs are going up due to some added fees.

 

[temery]

Homeowners will face new refinancing fee starting in September

Fannie Mae and Freddie Mac, which back millions of mortgages, announced a 0.5% fee on all refinance transactions starting Sept. 1.

www.yahoo.com

 

[BackAftaThis]

Call your lender and ask them if you can modify the loan, it's cheaper than refinancing, good luck

What are the benefits to modifying vs refinancing other than costs?

 

[B1GEast]

What are the benefits to modifying vs refinancing other than costs?

We modified twice when rates started dropping after 08. Paperwork was simple, it was done rather quickly and we didn't pay much to do it. We didn't have to qialify since we already had the mortgage. Someone mentioned in this thread that they refinanced for free, that might have been a modification, not sure though.

I think that lenders would much rather work with you, than to lose a profitable contract to another bank.

What you pay to the bank in the form of interest over the lifetime of the loan is insane.

If you can afford to make one extra payment to the principal every year, you'll save yourself a lot of money and pay off your mortgage sooner.

 

[husky8273]

What are the benefits to modifying vs refinancing other than costs?

no underwriting thus alleviating many, many headaches, time, energy, effort, etc.

 

[uconnyankee]

This was literally my exact same experience with Wells Fargo.

Wells Fargo sucks on a lot of levels!

 

[huskiesNhoos]

anyone hear anything about Filo Mortgage? seems like they're new this year, but have some phenomenal rates that seem too good to be true...and as the old saying goes...

 

[Hey Adrien!]

Just talked with a rep from my loan company: New Rez:

26 years left in a 30 year mortgage at a 3.375% rate. About 40k away from 20% principal paid off to remove our mortgage insurance.

The rep quoted us for a FSA streamline 24 year mortgage at 2.875%. For a $50/month increase we'd have a $120/month increase of the proportion of our payment going to principal and of course that proportion changes throughout time.

The $4k fees will be spread out through the life of the mortgage and get to have one month without payment so it'll be nice to have 2.5k+ go towards my credit card payments and/or use that as a safety cushion.

Thoughts?

 

[casual-yardin]

Just talked with a rep from my loan company: New Rez:

26 years left in a 30 year mortgage at a 3.375% rate. About 40k away from 20% principal paid off to remove our mortgage insurance.

The rep quoted us for a FSA streamline 24 year mortgage at 2.875%. For a $50/month increase we'd have a $120/month increase of the proportion of our payment going to principal and of course that proportion changes throughout time.

The $4k fees will be spread out through the life of the mortgage and get to have one month without payment so it'll be nice to have 2.5k+ go towards my credit card payments and/or use that as a safety cushion.

Thoughts?

You always "skip" a payment on a re-fi or purchase. Mortgages are paid in arrears, rent in advance. I wouldn't get too caught up with the years / payment. You can always pay more if you are able. Obviously not sure of your whole picture but I would go for a 30 year at the lowest rate and if paying it off early is important to you make extra payments.

 

[Hey Adrien!]

You always "skip" a payment on a re-fi or purchase. Mortgages are paid in arrears, rent in advance. I wouldn't get too caught up with the years / payment. You can always pay more if you are able. Obviously not sure of your whole picture but I would go for a 30 year at the lowest rate and if paying it off early is important to you make extra payments.

I'd rather not re-fi back into a 30 year.

Based on what I shared in the previous post, better to:

a) just stay where I'm at
b) refi into the rate they offered

Since it's the company I've been with since the start, I feel like they're giving me this rate as an incentive not to shop around to other companies. Better to keep me at a rate where they lose less interest a month and lose me completely.

Thanks again for all your help.

 

[husky8273]

Just talked with a rep from my loan company: New Rez:

26 years left in a 30 year mortgage at a 3.375% rate. About 40k away from 20% principal paid off to remove our mortgage insurance.

The rep quoted us for a FSA streamline 24 year mortgage at 2.875%. For a $50/month increase we'd have a $120/month increase of the proportion of our payment going to principal and of course that proportion changes throughout time.

The $4k fees will be spread out through the life of the mortgage and get to have one month without payment so it'll be nice to have 2.5k+ go towards my credit card payments and/or use that as a safety cushion.

Thoughts?

will they modify the rate on the existing loan for a small fee?

 

[Hey Adrien!]

will they modify the rate on the existing loan for a small fee?

I haven't asked. You mean just keep the 30 year and then just negotiate the % down?

 

[Stinger92860]

If anyone can swing it making payments every two weeks cuts a ton of interest!

does anyone know, can I simply start paying every 2 weeks or does it require a formal process for an existing loan? I currently have a 15 years and I pay extra money every month? Thanks in advance.

 

[Stinger92860]

I just closed on Saturday and used better.com which was super easy.

Was at 4.125% for a 30 and went to 3.125% for a 20. I could have gotten 3% for a 20, but they paid me $2,300 to take a higher rate. Break even is about 7 years on that so i took the cash upfront. They gave me an appraisal waiver so my closing costs were $1,000. Basically got paid $1,300 to refinance.

Better.com right now has a 20 year refi at 2.875 and they'll pay you $1,500 to take that. You'd likely be paying very little out of pocket.

did they bundle closing costs into the total mortgage? I won’t do that.

 

[HuskyHawk]

I was able to get 2.375% (2.4% APR), on a 15 year...

Getting a little nervous as I'm waiting for everything to go through. Haven't heard much in past couple weeks as broker is pushing through a ton of loans. I check in periodically and am told everything is on schedule.
Like sitting on a plane stuck on the tarmac....

Just signed papers to sell our house in Vermont (more or less inherited from my in-laws) and the buyers have a rate similar to that, I think 2.275% on a 15 year. I haven’t really watched the rates. I’m still at 4.1% on my 15 year but there is no point in refinancing with 6 years left.