Refinancing the home

Aaron Ford · Dec 15, 2010

While sitting here convalescing due to knee surgery, I started looking into refinancing the home we bought in 2003. I got a sweetheart of a loan rate at that time. Got curious and started looking. 5.75% on a 30 year fixed in 2003 was about as good as it got. First time homebuyer, primary residence, good credit, I got all the deals. Today if I refinance to a 15 year loan at 4.3% my payment goes down and I pay off the joint 8 years sooner.

Can I go wrong here?

Aaron

Warren Bult · Dec 15, 2010

As long as refinancing cost are low, you cannot go wrong, most of your payment on a traditional 30 year loan goes to intrest for the first dozen years or so before you really make a dent in the principal amount

JDemaris · Dec 15, 2010

Only mortgage I ever had was in 1979. 14% for 10 years. going by that, you're doing pretty good. But NO mortgage is much better then a loan at any percent.

Mike (WA) · Dec 15, 2010

Rule of thumb is that if you can get at least 1% lower interest rate, and you plan to stay in the house at least 5 more years, you're ahead to refinance. Assuming, of course, that the fee ("points") is reasonable (1% or so).

The 30 yr. vs. 15 yr. doesn't enter into it (except for the fact that the 15 has a lower interest rate at any given time)- because you have a 15 yr. now, just not officially. To pay in 15 years (or 10, or whatever), just make extra principal payments every month.

Coloken · Dec 15, 2010

from my experience:
Interest has gone up at least half a percent in the last week or two, since election..supposed to keep going up.
A simple loan for me is taking over 30 days with over 50 sheet of paper of pure junk forms.

Anonymous-0 · Dec 15, 2010

Make payments every 2 weeks instead of every month. It will save you thousands on interest. You can save even more doing it weekly but it's not a real big difference. I think a 25 year monthly mortage is paid off in around 18 years making payments every 2 weeks. If you can get a lower interest rate without having to pay a whole bunch to do it, go for it. Dave

Anonymous-0 · Dec 15, 2010

We just refinanced for 30 years for 4.25% and pulled out a bunch of cash. Given that the interest is tax deductable we think the money is costing something like 1%, and there are a lot of good things to buy at firesale prices right now. The government is so far in debt that they are going to have to start printing more money, causing the dollar to devalue, driving up interest and inflation to the double diget level. In the early 1980's I remember my grandfather having bank notes, CD's I think, paying 19%. Even if the banks start paying 6-8 % interest why pay off a mortgage that actually costs 1%.

Spook · Dec 15, 2010

Depends on the points and fees. I went from a 10.5% 30 yr mortgage in 1986 to a 7% mortgage in 1991, 15 yrs. Paid it off in 2001. Best thing I ever did. Not so much the financial issue, it really gives you peace of mind, at lest in my case.

plow hand · Dec 15, 2010

I refinanced my home loan 0 closing costs 0 finance charge..I went from 4.75 to 4% saved $200 a month..I have my mortgage through Wells Fargo..It is called a Streamline loan..

kyhayman · Dec 15, 2010

I'm with you, no mortgage is a good mortgage. Mine was a demand note, rate fixed per year, ranging from 10-12 percent in the late 80s early 90s. When that was paid off I said never again. Ate my words in 01 with a 0 percent loan from Chrysler Credit on my truck but I just couldnt stand it. Ended up paying it off after just a few months. If I cant pay for it, I dont need it.

kyhayman · Dec 15, 2010

I'm with you, no mortgage is a good mortgage. Mine was a demand note, rate fixed per year, ranging from 10-12 percent in the late 80s early 90s. When that was paid off I said never again. Ate my words in 01 with a 0 percent loan from Chrysler Credit on my truck but I just couldnt stand it. Ended up paying it off after just a few months. If I cant pay for it, I dont need it.

Gun guru · Dec 15, 2010

The best thing you can do is pay it off sooner, depends on points and fees. Dont let the lender rip you off.

I dont know why people choose a 30 year fixed loan. You are better off with a 20 year or 15 year loan. 30 years from now I will 72 YO. I cant see paying on a home if I was over 65.

Anonymous-0 · Dec 15, 2010

Beware. I thought I could save some dough about 2 years ago. I had to pay $750 to the bank to apply for the refinance. They sent an appraiser to look at the house. When I went back to the bank, they said "Oh, sorry, we can't give you the refinance- you have a bedroom that is unfinished" I was remodeling the sheetrock. Thanks for taking my $750, Chase.

MarkB_MI · Dec 15, 2010

Perhaps. You need to do your research. In particular, you need to know your points and closing costs. Pin down the lender: Make them break it down exactly what you are paying for, line by line, and how much it will be. They have to provide you this information before you close, but they sure don't like to give it to you even a day beforehand. Make sure you have it before you lock in.

It's much trickier today, because the lenders have to be a lot more selective than they were a few years ago. A while back my wife and I were solicited by CitiMortage to refinance our house. You can read about this bald-faced scam at the link below.

There are a number of websites that will help you crank through the refi numbers. Google on "refinance calculator".
CitiMortgage Scam

1936 · Dec 15, 2010

Been their and done that ifin you have the monthly nut now just add 100 to 150 extra each month to the payment which should get you out to the end about the same time for a new note AND take the $$$ it will cost to refinance the new note and pay it on the current note and see where this takes you for the end point.

The catch 22 question the banker is going to ask you is how much more above the total note do you want???

Title company will come in at about 1500 or so is why it is better to just add to your current payment each month plus the cost of the title services which are a total RIP OFF.

Aaron Ford · Dec 15, 2010

It looks like it will save me about 44,500 bucks. Total cost is less than 2K. $500 up front for appraisal. This is through my local small town bank. I could go through a different bank and save 9 dollars a month, but htis one is on my way home from work, provided they keep the loan.

Aaron

Jason the Red · Dec 15, 2010

If you are looking to re-fi, you should maybe check into US Bank's smart mortgage. My cousin's husband is in their wealth management division, and used it to refinance his home, as well as some of my other family members. They all say it was exactly as advertised no hidden fees, gimmicks, etc. Worth a look.
US Bank

jd b puller · Dec 15, 2010

(quoted from post at 21:35:01 12/15/10) It looks like it will save me about 44,500 bucks. Total cost is less than 2K. $500 up front for appraisal. This is through my local small town bank. I could go through a different bank and save 9 dollars a month, but htis one is on my way home from work, provided they keep the loan.

Aaron

Aaron, be wary of the "44,500" saved. Part of that is because you are changing the TIME of the load. Part of it is from lowering the amount of interest that you are paying. Make sure you factor all the upfront costs (watch out, they will try to roll them into the loan, where it only adds "a few dollars" to the payment), of course you pay for it about 3-4 times when you do that.

Everyone has thier favorite calculator, this site has several that I like.
https://secure.dccu.com/calculators/default.asp?calculator=17

greygoat · Dec 16, 2010

Interest rates are starting to move up, lock in
while you can. 2 weeks ago..below 5%, this week,
5.09% and moving up!

OhioD14 · Dec 17, 2010

Just curious, but with the huge amount of inflation coming, would it be advisable to get a LONGER term loan, and lower the payments, and let the Fed Reserve crooks help dilute your mortgage?

I guess it all depends if a person can maintain employment, as well as an increase in salary that is in accordance with the inflation.

Anonymous-0 · Dec 17, 2010

Can you count on there being no wage DEflation, due to the large numbers of unemployed out there? If wages trend lower while prices continue to trend higher, the entire economy of our country will implode.

My advice would be to refinance for the shorter term and the lower payment, and then PRAY unceasingly that it all stays together until you get the place paid off.

Refinancing the home

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