refinancing your home

[binny]

When does it make sense to refi?


If youre going to svae a lot per month but it will take you a while to make up the fees that you pay ( that are of course wrapped into the new mortgage), does tha make sense?

If it s going to improve your credit score? is that enough?


What ae your criteria for making this decision?

 

[lazarru]

They say that you should ref if your going to save more than a point on the interest rate, but that is just in general terms. We ref when we could drop it 1/2 a point. Basically you need to look at the closing costs, determine how much your saving and see if you plan on staying in the house long enough to pay them off.


For example, if your closing costs would $4,000 and you're going to save 200 a month by ref then you'd have to stay in the house for 20 months in order to break even, So you don't plan on moving in the next 2 yrs it makes sense. We're ref now, rolling a 2nd mortage back into our 1st, we're actually going to drop the monthly payment on the 1st mortage by 20 bucks, but also totally drop the 2nd which is 250 a month, with closing costs just under 4000, we only need to stay here another 1 1/2 for it to make sense and we're not going anywhere.

 

[Rafiki Rafiki Rafiki]

The old rule is 2/2....

2% lower interest rate and will be in the house at least two more years.

If you want to send me the particulars on your deal, I can do an eyeball workup and tell you if it would be worth your while.

 

[clh2]

I am a refi Queen. We've got a super low rate right now, so I doubt we'll be refinancing any time soon.

We have refi'd for several reasons throughout the years:

the first was to go from a variable to a fixed rate mortgage - extra bonus - the house appreciated so much in the first 1.5 years that the second mortgage was a traditional 80/20, so PMI was not needed. Huge decrease in payment and the PMI.

we refi'd about 6-months after that, because interest rates really went down (went from a 10.25 to a 8%), and also switched from a 30 year term to a 15. And - our payment went down too! Plus - refi rates were very low, we didn't need a different appraisal from the one 6-months ago etc.

In our new house - we've refinanced 2 times - the first was from a 30 year term to a 20 year term ( we just couldn't afford the payments on a 15 year,). But we did find out with this refi that the interest on a 20 year term is only slightly higher than a 15 year term, and was lots less than the 30.

We also refinanced the 20 into another 20 when the rates went really low about 2 years ago.

One thing my DH and I always do is pay the refi costs up front. Personally, our goal is to get the gosh darn mortgage paid off, so we don't want to keep adding to the balance.

Good luck!

 

[koopa]

I refinanced in 2003 to change my rate from 7% to 4.75% fixed. Also to pay my house off quicker in 15 years instead of 20.

 

[The Mystery Machine]

We refied 2 weeks ago. We went to a lower interest rate, lower monthly and got rid of the PMI. When we moved here 6 months ago we had to buy this house as a second, so once it appraised right, we refied.


ETA...We went from 6.25% to 5.75% & saved 300 a month on the monthly.

 

[chrissyk]

We refinanced our first house 7 months after we bought it. I think that we dropped the rate from 8 1/4% or thereabouts to 7%, but that wasn't the reason we refinanced. Our house had appreciated very rapidly (very beginning of MA housing runup), and our first lender wouldn't allow us to drop the PMI. We had the house reappraised and we had WAY more than 20% equity at that point. We refinanced to drop the PMI. The lower interest rate was a bonus. Sometimes it makes sense to refinance for reasons other than a substantially lower interest rate.

 

[sweet angel]

I've been here 5 years and I've refinanced twice. First from FHA to conventional (lower payments and lost the PMI). Second time was lower interest and the mortgage co I had contacted me and offered me a deal with no closing costs. It was a no brainer.

 

[binny]

Thank you all!

Youve given me a lot to think about and some great advice! I appreciate it



R3 I PMed you

 

[chrissyk]

I wanted to add that there are deals for no-points/no-closing-costs refinances out there, too. My sister did that a whole bunch of times on her old townhouse.

Also, if you end up going through a major lender, check and see if they credit your UPromise account for a % of the closing. I know that Chase participates in this program at least. I wouldn't choose a lender based upon this, but I would double-check to see if the lender that I chose was a participant. Once you have your rate and terms set, you have to ASK them for this benefit and make sure that you get credit, though...they don't just offer it up.