Looking to Refinance to 15 yr mortgage... help

[ilovepete]

We are looking to refinance our mortgage to a lower rate, 15 year mortgage. Ours isn't bad right now at 5.25% 30 year but I know it could be better and I think we could go with the 15 year. We don't want to borrow any more than just our current mortgage amount. We have considered adding a pool... but I don't know that we would want to do it right now.

I know I have read of other DISers doing this. What company did you use to refinance? Was your experience good? Any other tips for us?

 

[puffkin]

We just closed on our re-fi last night! We went from a 30 yr at 5.875% (we we had about 23 years left) and went down to a 15 year at 3.375%

We had also had a home equity loan that we had taken 4 years ago for some home improvements at 6.75%. We paid off both loans and added the closing costs to the amount financed so we owed $0 at settlement. Our monthly payment went down about $100/month. We will come out ahead in equity in about 3 years (becuase of taking the HE loan out an extra few years). I think the total interest we are saving on the 2 loans is $50k and we shaved 8 years off the mortgage so we are thrilled

We used our local lender, Mortgage America. We found out at closing that they had already sold us to Wells Fargo. The process did take awhile because they are much much much pickier now. IT ended up benefitting us though as rates dropped from our original lock of 3.75% down to 3.375% in that time. We had to call and ask for the lower rate, but they did give it to us.

 

[Kathy C]

Our mortgage is through Everhome Mortgage - not a company we picked but our original mortgage was sold to them. We refinanced last year to a ten year mortgage at 3.8% through Everhome and it was seamless. My goal is to have my house paid off in seven years!

 

[dhardawa]

Our mortgage is through Everhome Mortgage - not a company we picked but our original mortgage was sold to them. We refinanced last year to a ten year mortgage at 3.8% through Everhome and it was seamless. My goal is to have my house paid off in seven years!

Gah! I'm so sorry! My mortgage was sold to them years ago and it was the biggest nightmare ever.

I refinanced with a local bank. They had low rates and low fees. I have been very happy with my refi.

 

[Gr8t Fan]

Check with your current lender to see if they do a "streamline" refinance for exisitng customers.

 

[ilovepete]

Thanks everyone. I just checked with our current lender and got some info from them. We could switch to a 15 year mortgage at 3.375% (we currently pay 5.25%) for a total of about $182 more a month than we are paying now. So over the long haul that would take 13 years and about $100,000 off our mortgage. In the short run we'd pay $4,000 in closing costs (it would be rolled into the loan but I still have a hard time swallowing that) and out of pocket would be about $400 for appraisal and application fee.

What does everyone think? Is that worth it? I'm hung up on closing costs... we don't qualify for the streamlined refinance (we have only been here 2 years and our current rate is too low is what they said for the reasons).

I checked with our local lender and their rates are about .5% higher.

 

[riley2008]

We're at 5.25% too with two years in to a 30year note. Our loan got sold to SunTrust and they won't even talk about re-fi with us. Other places we looked at said the same with about $4000 in closing rolled into loan and pay OOP for appraisal with 3.5% to 3.75%.

I'm having a tough time too, when everyone is posting about "no closing costs".

 

[ilovepete]

We're at 5.25% too with two years in to a 30year note. Our loan got sold to SunTrust and they won't even talk about re-fi with us. Other places we looked at said the same with about $4000 in closing rolled into loan and pay OOP for appraisal with 3.5% to 3.75%.

I'm having a tough time too, when everyone is posting about "no closing costs".

Wow we are in the exact same situations! We are 2 years into a 30 year as well.

That reminds me of another question. We got the homebuyer tax credit in 2009... we don't have to pay that back just for refinancing, right? I can't find anything that said we would, but I can't find anything that said we wouldn't either. It isn't like we are moving, just getting a new loan so that is why I think no but I don't want to risk it without knowing for sure.

 

[puffkin]

Thanks everyone. I just checked with our current lender and got some info from them. We could switch to a 15 year mortgage at 3.375% (we currently pay 5.25%) for a total of about $182 more a month than we are paying now. So over the long haul that would take 13 years and about $100,000 off our mortgage. In the short run we'd pay $4,000 in closing costs (it would be rolled into the loan but I still have a hard time swallowing that) and out of pocket would be about $400 for appraisal and application fee.

What does everyone think? Is that worth it? I'm hung up on closing costs... we don't qualify for the streamlined refinance (we have only been here 2 years and our current rate is too low is what they said for the reasons).

I checked with our local lender and their rates are about .5% higher.

I also don't know of anyone that can pay low/no closing costs. Some of the fees things like title insurance type and recording fees. I know you can argue some of the prep fees, but there are always some costs involved and most places won't eat them. Our fees were about $3000k that we added onto the loan.

If you can afford the extra $182/mo AND you plan on staying in your house for the next couple of years, it makes sense. What you need to do is go to an online calculator and look at the amortization schedules 3 ways.

1. pull out your original schedule for your current mortgage.
2. run the new schedule for the 15 year loan
3. run the schedule for your current loan/rate but tack on that $182 as an extra payment

Then pick a point in the future that is a safe bet at how long you will be in this home. For instance say 5 years. Then look at what your remaining principle is on all three options. You can work backwards or forwards to find where your break even point is. IT can be really eye opening.

Of course if you plan on staying in this house for the longterm AND can pay the extra $182 a month, it is a no-brainer to refinance. You are saving $100K!!!!! Who cares about $4k in closing costs in the long term scheme of things if you are staying in this house. Rates cannot go much lower than this so now is the time to do it if you can

 

[ilovepete]

We do plan to be here long term... so I guess it really does make sense. I do have a hard time swallowing that, though! LOL

Also, it is REALLY close as to if our home would appraise at a value to take the PMI off. It should... but it may not. So if we had to add PMI that would be another addition to the payment.

We could afford it... we are about to pay off DH's car way early and so basically would just reallocate those funds. And you are right about the rates, they really can't get much lower.

Well this gives me a lot of thinking to do. I really appreciate all of your input. Keep it coming if anyone has anymore! It really helps me to know that others paid these closings costs as well and still came out way ahead.

Has anyone used a place like Lending Tree to find a loan for them? It scares me a bit but I heard of someone that just got a great deal from using them. I also read some really bad reviews so it seems mixed.

 

[alyssa810]

We refinanced a few months ago. My DH had played phone tag with our current (well, our previous current) lender before finally speaking to someone who offered us 4.25 % and closing costs of about $3600 (i know rates have since gone down too....) We hear a lot of commercials for East-West Mortgage; they competitive rates but their big selling point is that they have a $500 closing cost. What the $500 closing costs included was a $400 non-refundable application fee. However, when it came down to it, we ended up having to pay about $1900 in closing costs, which was a disappointment. The other thing was that over the period from which when started applying we dealt with about 6 different people from the mortgage company, we had to re-send paperwork several times, and their customer service was -to put it bluntly- pretty crappy. There's a HUGE difference between $500 closing costs and $1900 closing costs, and one of the things they said was that our credit score could affect those costs...my DH's score was in the high 700s, and mine was just over 800, so it's not like our credit was bad.
The other thing was that we have a small home equity loan for our boat, and we wanted to keep that separate and DH mentioned that up front when we started the process, and they managed to screw that up...
I guess what it comes down to is that I don't recommend using East-West. Locally, they have great commercials, but we weren't happy. We were however, happy with refinancing because our mortgage only went up about $80, we're saving over $80K over the course of the loan, and we're paying the same amount each month (we were paying more than the amount due on the old loan; we were paying about $120 in extra principal, and now it's more like $50 but it's still an overall improvement).

 

[DisneyAndRedSox]

We are refinancing with Amerisave right now- 2nd time with them and our neighbor has also used them. No issues except we were all sold right away (one was BoA and the other Chase) We locked in this week- going from a 30yr @4.65% to a 20yr @ 4.0%. We have to pay the appraisal, but barely any closing fees.

EDIT: right now 15yrs are below 4% at Amerisave. You just have to be really comfortable that the whole process is done on-line.

 

[kacaju]

if you can do it...GO FOR IT!! We refinanced to a 15 year from a 30 year about 9 years ago. I did not want to do it. dh and I agrued over it..our financal guy had long talks with me about it. In the end I broke down and agreed to it, but was not a happy camper. Here I now sit knowing my mortgage will be paid off in about 6 years and I AM A HAPPY CAMPER now!!

 

[MrsPete]

This isn't about re-financing -- but it's about 15 years.

When we were first married and bought our first house, we took out a 30 year mortgage, but we paid it on a 15 year schedule. At that point we didn't know whether I'd want to stay home with children or whether we'd have twins or triplets that'd have made that choice for me. We felt like it was a safe choice for a young couple to make.

Of course, we had the self-control to pay extra every single month. If you do, it's a great choice. And, obviously, you should make sure that your loan has no pre-payment penalty.

 

[daughtersrus]

I also don't know of anyone that can pay low/no closing costs. Some of the fees things like title insurance type and recording fees. I know you can argue some of the prep fees, but there are always some costs involved and most places won't eat them. Our fees were about $3000k that we added onto the loan.

About 8 years ago, we got a package in the mail from Wells Fargo offering a no-cost mortgage because of our credit history that we had with them with a store credit card. After investigating a little, it was legit and we refinanced with them at 5% for a 15year mortgage. There were no costs at all. As a matter of fact, everything was done via Fed Ex at their expense because there are no Wells Fargo branches in IL.

We recently received another offer from them to refi to another 15year mortgage at a rate in the 3% range. There are no costs to this mortgage either. We haven't decided yet if we're going to do it or not. We're leaning towards doing it since we could still continue with our old payment adding the extra directly to principle.

We currently owe about $75,000 on our house with a current value about $240,000.