Looking to refinance our mortgage--any tips?

[ead79]

DH and I bought our first home just under 2 years ago, and since then interest rates seem to have gone down quite a bit. Provided that it's possible to refinance at a good rate without tons of equity in our home, then we'd like to refinance to reduce our monthly payment. We have a 30-year fixed loan right now, and we'd want to stick with that.

Any tips, strategies, or pitfalls to avoid? This whole concept is new to us as first-time homeowners.

 

[golfgal]

What is your current rate? Generally you want to move down at least 3/4ths of a point if you are going to be in the house less than 5 years to make up for the closing costs. The biggest issue is if you have any equity left in the house. If not, you might not be able to refinance. FHA does have a program out there that you can refinance without an appraisal if you have a current FHA loan but the rates aren't all that great. It is worth looking into for sure.

 

[The Mystery Machine]

Shop around. You will have to get an appraisal. How is your housing market for your neighborhood?

How many houses have sold near you and I mean your close neighbors.

We just did a refi and the appraiser was only taking homes closing within the last 6 months. That might be something to check out first.

 

[ead79]

Our current rate is 6.75%.

I did a quick peek on Zillow to see their guesstimate about our home's value. It looks like our house is worth about 11% more than we still owe on it.

 

[The Mystery Machine]

Our current rate is 6.75%.

I did a quick peek on Zillow to see their guesstimate about our home's value. It looks like our house is worth about 11% more than we still owe on it.

No zillow. You need to go to the public records and find out what the homes near you sold for. Yea, 6.75 is pretty high. I would certainly go for a refi.

 

[golfgal]

Our current rate is 6.75%.

I did a quick peek on Zillow to see their guesstimate about our home's value. It looks like our house is worth about 11% more than we still owe on it.

YES LOOK INTO REFINANCING!!! You may be able to drop 2 full points. Find a good broker or go to your bank for different options. Zillow isn't really all that accurate but at least it seems like you have some equity. Don't take any of your equity out when you refinance-bad, bad idea. Just lower your interest rate. Depending on your payment you will save hundreds each month as well as a LOT of interest over the life of the loan. You may even be able to go into a 15 year mortgage for about what you are paying now but I would stick with the 30 year and take whatever you save and invest the money.

 

[Bren's Mom]

Find a website that lists the recent SALES in your area. Compare the sold sf prices to your sf to get an idea. Home values HAVE dropped in the 2 years. If you're currently mortgaged for 89% of your homes value you *might* be able to get a refi that allows up to 90% LTV but you wouldn't be able to roll closing costs in, you'd likely have to pay them upfront. Sounds like you are right on the edge...so I'd contact a reputable broker...have them find you the best deal possible and get the appraisal if the interest the broker finds you along with the costs associated are worth it. (FWIW, we bought in 2008 at 6.25, refi'd last year at 4.75% 30 year fixed...so it can be done...but we put down 20%.) Also ask about FHA loans.

 

[PaulaSue]

WOW your rate is High, I would def look into refi. We got this house almost 2 years ago at just under 6% and we are going to re-fi almost 2 % less (with points). Dh got us a 30 year and I still yell at him often for what we have paid in interest and haven't even touched the princ much.

I am not great money manager but I am trying to learn (Dave Ramsey). Check out this calc I found. I love looking at all the options and figuring out the stuff before the bank even tells me.http://www.mortgagecalculator.org/

I would try to refi and at least cut 5-10 years off your loan. Your payment might be about the same even with closing costs, points etc.. Plus look at the calc to figure all the savings from NOT paying the interest at the old rate and a 30 year compared to a 20 year.

 

[Planogirl]

Check your credit reports BEFORE you refinance. If I had a nickel for everyone who called in a panic to have something corrected....

 

[clh2]

A thought about Zillow - it says my house is worth over $500,000. WooHoo.

The reality is - our house is worth a lot less... And I am OK with that

 

[kacaju]

Since this is your first home what are your plans? If you can see yourself living there for a long time and right now you can comfortably make your payment see if you can do the re-fi for a 20 or 15 year loan.
We re-fi'ed to a 15 year loan 9 years ago and we now have about 6 years left!! I can't tell you how wonderful it is to look at the monthly payments DROP about $900 each month and seeing that it is more principle then interest!! If we had stayed with our original mortgage we would have about 16 years left on it. If we had re fi'ed to another 30 year we would have about 21 years left to pay. Instead, like I said we have 6 years.

 

[MnMomtoboys]

Check out Credit Unions. And if you can start an account withone that you like.